Credit Repair: Tips for Empty Nesters

Even empty nesters can find themselves in need of credit repair. Perhaps you have put too much financial stress on yourself as your expenses rose but your income didn’t quite keep up. The following borrowing tips can help you on your way to better credit.

1. Lose the credit cards.
If you are in need of credit repair, the first thing that you must do is get rid of your credit cards. Do not use them anymore. You must pay off your credit card debt, which is impossible if you are adding to it.

As empty nesters, you have many expenses before you. College costs a lot of money. It can even cost more than your house. Because of this crunch on your money, it is important to be patient with purchases and only buy what you can afford. Credit cards provide a false sense of means. Not only are you acquiring debt to make your purchases, but you also have to pay interest on top of what you borrowed. Instead of racking up credit card debt, which leads to needing credit repair, put them away and focus on paying them off.

2. Know the difference between smart debt and dumb debt.
Anyone who is in need of credit repair needs to understand the difference between smart debt and dumb debt. Too much dumb debt can get you into a situation where your credit needs improvement. By understanding the difference, you can make wiser choices in the future.

Smart debt is any debt that leaves you with an asset that is worth the cost of the loan. Dumb debt, on the other hand, is credit that is used to buy things that you do not need or cannot afford. It is the dumb debt that gets us into trouble. Paying off the dumb debt as soon as possible -- and avoiding it in the future -- is a smart financial move and can help you repair your credit.

3. Be aggressive about borrowing for college.
Don’t think earning a good income means you should not apply for financial aid to pay for your children’s college. It may be a good idea to take out loans and your children should accept every grant and scholarship they are offered. If your children are able to get any form of financial aid, it can ultimately help you repair your credit since that aid cuts down on the loans you need. Have your kids apply for student loans and apply for PLUS loans yourself. PLUS loans are federally sponsored education loans that give you some options on repayment:

  • Standard – fixed payments throughout term 
  • Graduated – payments that start low and begin to rise 
  • Income-sensitive – payments based on your actual income 
  • Extended – payments that let you pay off over a longer timeframe 
  • Consolidated – payments that include multiple loans in one payment 

Choose the PLUS repayment plan that best helps you on the road to credit repair.

4. Consider downsizing your home.
With kids out of the house, you may not need a large home anymore. If you are in the midst of credit repair, you may not want the large mortgage payments and home maintenance bills that go along with it. This is the time to consider downsizing. You can sell your current home and use the equity for a down payment on a new house and to pay off your debt load. This can really help with credit repair. You may achieve lower monthly payments and can pay off a significant portion of your debt. First, make sure you carefully consider whether this is the best way for you to use your home equity.

5. Save for the future.
Even though you are trying to get your credit in good repair and you do not really need to continue saving for your children’s college, you still have your own future to consider. Now, more than ever, you must save for your retirement. It is rapidly approaching and you need as much money as possible. You also need to fix your credit before retirement. Work hard now to save and pay off debt so that your credit is improved in time for your retirement.


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