Tidbits^® - March 2007

Credit insight from Credit.com

Welcome to the Credit.com newsletter!

This free newsletter delivers easy-to-read tidbits about credit directly from personal finance experts.In this issue, we're focusing on how to protect your credit in a crisis. We'd love to hear from you! Send an email to tidbits@credit.com with your credit questions or comments anytime!

Ask John

Join John Ulzheimer in Atlanta on Saturday, March 31 for a FREE credit seminar!

Tidbits^® newsletter readers in Georgia are invited to attend this unique educational experience. Topics will include improving your credit scores, reducing debts, managing money and recovering from bad credit.

Learn more about the free Atlanta credit seminar: http://www.credit.com/r/tidbit_vol18

Credit Crisis: How to Protect Your Credit in an Emergency

Most people know that simple things such as paying bills late or applying for too many new accounts will damage their credit scores. But what about more complicated life events like divorce or illness? Did you know that these crisis situations can have a major impact on your credit if you're not careful?
Let's investigate:

Divorce
It's a common misconception that divorce decrees separate your legal responsibility for shared accounts. Joint credit cards,co-signed auto loans, and shared mortgages will continue to belong to both people even if they are included in a divorce settlement. This means that a late payment on an account assigned to your ex-spouse can cause lasting damage to both of your credit scores.

The Solution: The only way to stop the shared responsibility of joint accounts is to refinance the accounts into one person's name or close them. If that's not an option, keep a close eye on the account and be ready to pay if your ex can't. Also, read our Divorce Survival Guide for more tips:
http://www.credit.com/r/tidbits_divorce_survival_guide/

Illness
Getting sick or injured is expensive! One trip to the emergency room for a broken leg can potentially break the bank. And medical providers aren't easy going when it comes to being repaid. Unpaid medical bills are often sent to collections, which damages your credit for seven years.

The Solution: Remember that it is always ultimately your responsibility to pay medical bills, even if your insurance company should have covered the amount. It's better to pay the bill than damage your credit with a collection account. Read more about dealing with medical bills: http://www.credit.com/r/tidbits_medical_bill_nightmares/

Taxes
This is one crisis that you can at least see coming! If you know that you're going to owe a large amount of taxes this year, start planning ways to pay now. Tax liens cause a huge amount of credit score damage and have no expiration date if left unpaid.

The Solution: Options including IRS payment plans, personal loans, credit cards or even a garage sale can help you avoid a tax lien. Start by calculating how much you'll owe on April 15th and then read this recent CreditBloggers.com post on tax payment options:
http://www.creditbloggers.com/2007/02/are_you_ready_t.html

Job Loss
Losing a job can throw your finances into a tailspin. You have no income but the bills keep coming. That small credit card balance can balloon and you may default on your car or home loan. All of these changes can damage your credit scores.

The Solution: Create an emergency savings account with enough to cover a few months of your expenses in the event of a job loss. Also, be sure you have access to credit cards that can help you pay if you're in a pinch. And don't forget to talk to your creditors if you find yourself unable to pay large bills; they might be able to help. Read more about facing a financial crisis: http://credit.com/r/tidbits_facing_financial_crisis/

Do you have a question about how to cope with a financial emergency? Credit.com's personal finance, real estate, credit scoring, and debt experts would love to hear from you at tidbits@credit.com.

Quick Tip

Did you know that you don't have to be a full time student at a university to qualify for a student credit card? Part-time and community college students can also take advantage of these great credit card deals!

Student credit cards can be a great way to establish your credit. These premium credit accounts lower their entry requirements for students, havelow rates and offer great rewards programs.

Apply for a Discover® Student Clear Card online today here: http://www.credit.com/r/disc_stud_clear/

On the Blog

Tax time is right around the corner. Do you know the big scams to avoid?

In this post, Nancy Castleman shows you 12 tax schemes you need to steer clear of this April. Phony refunds to tax preparer fraud, this short article covers it all!

Read more about the IRS's dirty dozen: http://www.creditbloggers.com/2007/02/the_irss_dirty_.html

Quote of the Month

“The IRS spends God knows how much of your tax money on these toll-free information hot lines staffed by IRS employees, whose idea of a dynamite tax tip is that you should print neatly. If you ask them a real tax question, such as how you can cheat, they're useless.”
- Dave Barry

Tidbits^® - March 2007

About this newsletter
This information has been compiled and provided by Credit.com as a service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.

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