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You’re completely debt-free. No mortgage. No car payments. No student loans. Does your credit score even matter?


You own your home and car free and clear. You pay your credit-card balance in full every month. You have no remaining student loans — or any outstanding loans.

In short, you have no debt. So does your credit score even matter anymore?

On the surface, the quick answer is no. Assuming you’re sure you’ll never need to borrow money again, your credit score no longer matters as much as it once did.

But that doesn’t mean it’s irrelevant.

“People with no debt don’t have to worry too much about their credit score,” said Rob Schultz, a certified financial planner in Encino, Calif. “But other institutions may use their credit score, so it can still be important.”

Consider what happens when you buy auto, home or some other type of insurance. Insurers will quote a price based on a range of factors, often including your credit rating.

Applicants with excellent credit may qualify for lower rates, especially for car insurance. Conversely, drivers with poor credit pay $144 a month more for full coverage than those with good credit, on average.

Just because you’re a homeowner with no mortgage doesn’t mean you won’t move at some point. If you decide to rent, a landlord may run a credit check.

“And if you sign up for any utility or new cell-phone contract, they’re going to run your credit,” Schultz added. “You’re not technically taking out a loan, but it could be a factor in whether you’re approved for the product or policy.”

Once you retire, you may figure you’re done working for pay. But many retirees re-enter the workforce for a variety of reasons. If you apply for a job, employers might ask your permission to run a credit check on you.

“While a poor credit score is unlikely to disqualify you from a job, it’s certainly a possibility if you are applying for a job involving financial responsibilities and access to sensitive information like banking,” said Carla Adams, a certified financial planner in Lake Orion, Mich.

Expats too may figure they no longer need to worry about their credit score after they relocate abroad. But if they return to the U.S., their lack of credit activity can leave them with no credit score. As a result, their credit history will eventually disappear.

“That can leave them in a difficult situation,” said Rod Griffin, senior director of consumer education and advocacy at Experian, a credit-reporting company. “Banks will want to see your credit history to verify your identity and open an account,” while renting an apartment also becomes harder.

Some consumers may also elect to finance their next car purchase even if they have ample cash on hand to pay in full. Economic conditions (such as inflation and interest rates), along with market swings, can affect their decision.

“I had clients in their late 60s who had no debt and always paid cash for their vehicles,” said Crystal Cox, a certified financial planner in Madison, Wis. “In 2020, one of their cars needed to be replaced when the market was way down.” Instead of tapping their investment account to access funds to buy the car, the clients sought a loan because they didn’t want to “sell low.” Their good credit score enabled them to finance the vehicle and leave their portfolio untouched as markets recovered.

The threat of identity theft raises another concern. As cyberhacks proliferate, it’s important for everyone — including the debt-free — to monitor their credit.

If you notice a big drop in your credit score, it could indicate a fraudster has opened accounts in your name and left a trail of unpaid bills. “Keep an eye on your credit report for new accounts that you didn’t open and hard inquiries you didn’t authorize,” Cox noted.

Also read: Credit-card interest rates have been hitting record highs, but they might have just peaked

Plus: Overdraft fees could shrink to as low as $3 under Biden administration proposal

Why no recession (so far, at least)? Credit the American consumer.

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