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To remove the shroud of mystery from some of debt’s most vexing questions, Michelle Singletary, a personal finance columnist at the Washington Post, recently held a question and answer session.
The following information is adapted in part from her article in the Washington Post.
Q: I have several credit cards. If I pay them all off and carry a balance of zero, will that negatively affect my credit?
It’s always a good idea to pay off your balances. In fact, the best way to improve your credit score is to pay your bills on time. In addition, you don’t have to use your credit cards to boost your score. Paying your bills in a timely fashion is much more important than using your cards frequently.
Q: My husband and I recently bought a home. Unfortunately, my husband has a lousy credit score. I have good credit, but a furniture store recently refused to sell me an item on credit. Is this my husband’s fault?
Alas, your husband is blameless here. His credit history did not impact your credit score when you were married. You and your spouse’s credit history do not begin to merge until you take out debt together. This occurred when you purchased the home, so if you fall behind on your mortgage, this will affect both you and your husband’s credit scores.
It is more likely that your recent home purchase led the lender to deny your furniture purchase. Creditors have become more wary of extending loans to people who already have major debts. A home mortgage certainly qualifies as a large debt.
Q: My husband and I want to combine our student debts into one loan. We owe roughly $36,000 combined, and would rather pay off everything in one bundle. Is this possible?
Unfortunately, this idea is no longer feasible. In 2006, a change in law disallowed the consolidation of spousal debt. Furthermore, even if it was possible to consolidate your debt, this wouldn’t be the wisest course of action. When you consolidate your loans, both spouses become wholly responsible for the other’s debt. So, in the tragic event of one spouse’s death, instead of that spouse’s debt being discharged, the other spouse would still have to pay it.
If you're having trouble paying off your credit card debt then you may want to speak with a lawyer about your bankruptcy options. Bankruptcy, after all, is designed to clear credit card debt.
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