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Can you beat an early retiree’s credit score?

by retirebyforty on May 8, 2013 · 31 comments

in credit

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I haven’t checked my credit score in a while because I have been so pretty busy being a stay at home dad/blogger. We don’t have any plans to get a loan, so checking my credit score hasn’t been a priority lately. However, it’s important to check up on your credit score and credit at least once a year so you won’t have any unpleasant surprises.

Reasons why you need to keep an eye on your credit score and reports

  • You need a good credit rating to rent.
  • You need to maintain a valid credit score to open a brokerage account. The Patriot Act made the broker verify the identity of the person by running a credit check. No credit score = no identity.
  • It is essential to monitor your credit score to make sure there is nothing unexpected there. Identity theft is a big problem these days and you need to be vigilant.
  • You may not need to borrow money now, but who knows what the future will bring? It’s safer to maintain good credit scores and monitor them periodically.

How to get free credit report and score

Free Credit Report

You can get your credit reports for free once a year at Annual Credit Report.com. Here, the credit reports are supplied by Equifax, TransUnion, and Experian. The reports contain all your credit history and you should take a look at them once a year to make sure there is nothing suspicious there.

Free Credit Score

I signed up with Credit Sesame last year and it is a good place to keep an eye on your credit score. Credit Sesame provides you the Experian National Equivalency Score for free. This is not a FICO score, but it should be in the same range. From what I read, the Credit Sesame score is usually a bit higher than the FICO score. The last time I checked both FICO and Credit Sesame was August 2012 and my Credit Sesame score was 10-15 higher than my FICO scores.

The great thing about Credit Sesame is it’s free. You can check your score monthly and keep an eye out for any big changes.

can you beat my credit score?

Can you beat my score? 815 seems quite high to me especially now that I don’t even have a regular job. Maybe it’s time to apply for some airline cards to accumulate some bonus miles. 8)

More services from Credit Sesame

Credit Monitoring

Credit Sesame just launched their free credit monitoring service. They track Experian data and will alert you via your Credit Sesame account, text message, or by email. Here are some examples of events that can trigger an alert.

  • New credit card
  • New auto loan
  • Lost or stolen credit card
  • Address change

You can turn this alert off at anytime.

Check your Debt To Income Ratio

My DTI is quite abysmal at 60%. This will prevent us from refinancing or getting any new mortgages. Actually, 60% seems a little high to me. I will have to update our annual income in my profile at the end of the year. It’s hard to estimate income when you’re self employed and have several sources of income.  My real DTI is probably around 45%. That is still too high, but it’s not abysmal.

Check the value of your home and your home equity

I usually use Zillow to estimate my home price, but I think their numbers are a bit low. Credit Sesame gives me another data point. Another nice thing is that you can see your home equity increase over time at Credit Sesame as you pay down your mortgage.

Don’t ignore your credit score

You need to keep an eye on your credit reports and score even if you are not planning to borrow any money. Credit Sesame and Annual Credit Report.com are two great places to monitor your credit for free. The credit score might not be the same as FICO, but it should give you a good idea of where you stand.

When was the last time you checked your credit score? Can you beat 815? If you use Credit Sesame, do you like their services?

credit sesame review

Disclosure: If you sign up with Credit Sesame through this page, then I will earn a small commission. This is one of the ways I generate income from blogging. You can think of it as a small donation to Baby RB40’s college fund. :)

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{ 31 comments… read them below or add one }

Greg@Thriftgenuity May 8, 2013 at 7:16 am

I check my score once a month on creditkarma.com. Can’t say I can beat 815, but in the high 700′s, so pretty good. It doesn’t limit me from getting the best rates.

Like you, I also use Zillow regularly to check on housing prices in my area and the estimate on my house.

I think both are very important to stay on top of.

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retirebyforty May 8, 2013 at 1:01 pm

I heard good things about Credit Karma too. I’ll check them out one of these days.
I feel like Zillow is a few months behind. Our condo price should be much higher than their estimate. The housing supply is very short in our area.

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Agatha May 15, 2013 at 9:17 am

I’m with you on Credit Karma. I love their service and I feel they have a real commitment to bettering the financial lives of peeps. They make me feel good…and that makes me want to do business with them.

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SavvyFinancialLatina May 8, 2013 at 8:00 am

:( I haven’t checked mine. I tried to a couple months ago, but it didn’t let me, said I need to file a paper application to get my credit score. Hubby’s too for some reason. I never did because filing paper applications are so annoying. I need to retry.

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retirebyforty May 8, 2013 at 1:02 pm

Really? That’s strange. Hope you can get it. You really need to get all this straighten out before shopping for a house.

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John S @ Frugal Rules May 8, 2013 at 8:46 am

It’s been a while since I check my score…maybe a year or so ago. I can’t touch the 815, but I was in the 770-780 range, so I am pretty happy with that. I do get our credit reports three times a year though to keep on top of that. I am a Jr. which means I have had several of my Dad’s accounts show up on my report in the past.

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retirebyforty May 8, 2013 at 1:03 pm

That’s good to know. I guess if you are a Jr., you need to be extra vigilant.

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steve May 8, 2013 at 9:28 am

At 804 I’m close, but you’ve still got me beat. As you mentioned in the article even a high credit score won’t let you refinance if you can’t show enough income. In my case I was denied a loan by 4 different banks even though I could show assets equal to double the loan amount. Any ideas on how to work around this screwy system?

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retirebyforty May 8, 2013 at 1:07 pm

Maybe get a home equity loan? Sorry, I don’t know. I’ll ask around. I know some people who had to buy with cash because they couldn’t get a mortgage.
How about peer to peer lending? How much are you looking to borrow?

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steve May 8, 2013 at 1:22 pm

I actually ended up being able to refinance, but only because I qualified under the federal HARP II program. I’d like to buy another rental property, but based on this experience I doubt I’ll qualify for a loan because as an early retiree I can’t show a sufficient source of income to meet the ratio guidelines. One suggestion I got was to take 529(t) withdrawals from my IRA since banks recognize that as a “real” source of income. Banks just don’t seem to understand people who don’t fit into one of their nice little boxes.

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retirebyforty May 9, 2013 at 7:00 am

It’s great that you could use HARP. Yeah, if we move, we probably have to buy the new place in cash. That is going to be a pain. I’m not planning to withdraw anytime soon so no steady income.

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Moon May 8, 2013 at 9:38 am

Last time I checked both of hubby and mine scores is just February, we were both around 800. We have been ‘checking’ our scores quite often – not intentionally but because of the refinancing (last Oct) and getting pre-approval for the rental property. I asked the mortgage company not to pull our score again until it gets closer to closing since I would like to avoid too many ‘soft hits’ on our score.

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retirebyforty May 8, 2013 at 1:09 pm

Your scores are really good. Congratulation! I don’t like all the soft hits during refinancing either.

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Cherleen @ My Personal Finance Journey May 8, 2013 at 9:55 am

Congratulations on such excellent score! Our credit scores is only on the 700 and I would say we are already satisfied with it. I use Experian in checking our credit scores and I do it twice in a year to ensure that nothing on my credit report comes out unexpected.

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Pretired Nick May 8, 2013 at 10:26 am

I haven’t worried about my credit score in quite some time. It’s pretty irrelevant if you don’t need any loans. Of course, now that you have me thinking about it, I think I should take a peek and see where I’m at.

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retirebyforty May 8, 2013 at 1:12 pm

If you’re not getting a loan, then the credit reports are probably most useful since you don’t need the score.

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Mike@WeOnlyDoThisOnce May 8, 2013 at 11:00 am

Too true about not wanted to get any nasty shocks. Also, most mistakes are rectified with some effort if identified early on. Just watch out for identity theft, as well!

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Darwin's Money May 8, 2013 at 7:57 pm

Something I was just reading about today was how retirees may have great credit scores, but they can’t actually get a mortgage. even if they have the cash! Banks are so bureaucratic and cautious these days that they decline mortgage requests for virtually anything. Sounds like you’re not moving any time soon though!

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retirebyforty May 9, 2013 at 7:04 am

Maybe they’ll loosen their purse string once the economy improve. I’ll have to do some research and write about this problem.

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SB @ One Cent at a Time May 8, 2013 at 9:10 pm

I didn’t do bad either. being in this country since 2005 and having a 806 and that too without a mortgage on record, I am not doing bad…

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retirebyforty May 9, 2013 at 7:04 am

That’s great!

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Do or Debt May 8, 2013 at 9:42 pm

Looks like I have 740 on credit sesame. Probably a bit lower based on what you are telling me. I think that’s pretty good, as I’ve never had a credit card and I only have my massive student loans. I guess by paying them ahead of time (and more than the minimum) and being a good renter is helping!

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retirebyforty May 9, 2013 at 7:05 am

You should get a credit card or two so you can build your credit. Just don’t use them much.

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Daisy @ Prairie Eco Thrifter May 9, 2013 at 6:25 am

I had the exact same score as you, last time I checked! I haven’t checked in about a year, so I’ll have to order a report and check my score. I don’t think Credit Sesame is in Canada, unfortunately!

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retirebyforty May 9, 2013 at 7:06 am

Nice score! I hope nothing funny pops up in your reports.

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Brittany May 9, 2013 at 6:32 am

I didn’t do too bad! Credit Sesame says I’m at 796. Thanks so much for posting this link because I never remember to check my credit scores and, while I’m not planning on taking out a loan or purchasing a house anytime soon, it’s good to keep an eye on it. Our car is still putting along, but it’s getting older for the type of car it is, so I have to keep it in the back of my head that I’ll have to be getting another car sometime. Hopefully later rather than sooner! So now it’s good to have something that I can log into and check more often.

(This is Brittany you met last night at Bunk Bar that also got the Cubano. Nice to meet you in real life!)

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retirebyforty May 9, 2013 at 7:08 am

796 is great! It was great meeting you. I think we’re not getting any loans for at least 5 years. Who knows though.
I hope your car keeps running too. It’s a pain to shop for a new car.

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Little House May 9, 2013 at 6:57 am

Can’t say I can beat your score (been hovering around 720 for a while), but a job doesn’t factor into a score – nor does rent as a comment above mentioned. It’s all about credit usage – credit to debt ratio, on time payments, and length of history. The older you get with a good credit history, the more your score goes up. In your case, since your mortgages are the highest debt on your report, most credit bureaus see this as “good” credit – hence the 800+ score. I personally use Credit Karma for a ballpark figure, but pull a traditional credit report once a year.

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The Shoestring Investor May 9, 2013 at 12:28 pm

For the UK based, it’s well worth going through a cashback site when getting a credit check – some say you can’t beat free, but they’ll actually pay you £5 to do a credit check. I’ve written a full guide on it here http://www.theshoestringinvestor.com/offers/make-over-100-in-2-hours/ Step 4 is where credit checks are :)

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Dave May 11, 2013 at 10:52 pm

We just did a refi. My wife had a 801 and I had a 817. I’m
56 and love to retire but there always seems to be one more
tuition or major home project. You do a good job. I wish
I could have been as smart about money at your age but
then we have raised 5 kids. Almost.

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Glen Craig May 15, 2013 at 7:24 am

It’s been a bit since I checked mine. I should probably take a peek. Last time I looked I was pretty close to yours though.

It is pretty important to maintain an excellent credit score. You never know when solid credit will come in handy.

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