| How to Manage Your Debt, Part 1 |
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We don't have to carry debt in our lives, but most of us do. Because the wrong kind can be so detrimental to your financial well-being, it pays to deal with debt as effectively as possible. Review your credit reports annually and see that any errors are corrected. U.S. residents are entitled to get one free credit report a year from each of the three major credit-reporting agencies. For details, go to www.annualcreditreport.com, and get all three reports. Often the information found in them is different. Make sure all reports show an accurate credit historyhave the reporting agency make any needed corrections. Request credit reports for both spouses. If you're married, be certain to get reports for each partner. You might be astonished to see how much your credit history differs from your spouse's. Review the reports for both spouses carefully. Pay for one of the credit reporting agencies to give you your credit score. Your credit score is a three-digit number that lenders, insurers, and others use to decide how they'll sell you services and at what prices. The higher your score, the better credit or purchase terms you qualify for. While you're reviewing your free annual credit reports, pay a few dollars for one of them to give you your credit score. Borrow money only to pay for items that will last longer than the loan, and either tend to increase in value or bring you financial benefits that are greater than their cost. Two examples of items that bring you value are your own home and your education. Financial planning pioneer Bert Whitehead calls these examples of "good debt" because they create positive financial effects, not the negative effects of consumer debt. |
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