Dear Liz: My wife and I have paid off our mortgage, we have no car loans, and we pay our credit card balances completely each month, which means that we basically pay no interest. We have four credit cards that are active and a couple more that are rarely used. My FICO score is currently just above 800. At some point we will need to replace our cars and will need car loans, so our FICO scores will be important. Since we currently have no mortgage, no car loans or any other loans, will our FICO score slowly drop, and will that affect our car loans?
Answer: Paid-off loans typically don’t disappear from your credit reports, at least not immediately. Many lenders continue to report these closed accounts for years, which contributes positively to your scores.
Even if none of these paid obligations show up on your reports, though, your responsible use of credit cards should support your high scores. Just continue to use your cards lightly but regularly and pay off all balances in full.
Since you have time before you plan to replace your cars, consider paying cash for them, or at least making a substantial down payment. It’s typically best to use loans only for assets that appreciate — and cars certainly don’t do that.
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Yet the phrase resonated somehow. Since devolution, when the Scottish Parliament was established after nearly 300 years of British rule, the Scots have definitely taken their own way.
One thing travel can do is help you better understand the world, and I understood Scotland a bit better after learning some of its history this summer. Its union with England was mostly supported by wealthy landowners, merchants and investors who wanted access to England’s colonies. The common people were not so enthralled. After that came the Highland Clearances, when tenant farmers were booted off their traditional holdings so that wealthy landowners could raise sheep instead. The evictions came with little notice and left a lot of suffering in their wake.
So maybe it’s not surprising that many Scots are suspicious of any system–political, social or economic–that favors the rich at the expense of regular people.
While England slashed public benefits after the financial crisis, Scotland restored tuition-free college education for its residents and added free long-term care for its elderly. (Actually, in-home care is free. Care in nursing homes is means-tested.)
As a result, Scotland is moving closer to the European model, where long-term care is at least in part funded by the government in many countries and where college education at public universities is free or very low cost.
These outlays might surprise people who believe the stereotype that Scots are tight with their money, but a Scotsman explained to me that what his people really like is good value for their money.
Renewable energy is a big thing in Scotland, too. The Scots surpassed their goal of 31% by 2011 and its 2020 target has been boosted from 50% to 100%. Again, that’s more like Northern Europe than the rest of the U.K.
Now Scotland is on the brink of deciding whether it wants to be independent. The U.K.’s prime minister, David Cameron, has promised Scotland more control if it stays with the union. So either way, it looks like Scotland may continue to rise.
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The CFPB alleges that the for-profit college chain exaggerated students’ job prospects to get them to take out private loans to cover its schools’ high tuition costs. The bureau says Corinthian then used illegal debt collection tactics “to strong-arm students into paying back those loans while still in school.”
The Bureaus wants the courts to halt these practices and grant relief to people who have taken out more than $500 million in private student loans.
As I wrote in my Reuters column “What to do when your college shuts down,” Corinthian is in the process of closing or selling its schools as part of an agreement with the U.S. Department of Education. People who have federal student loans have a shot at getting their debt discharged when a school closes, but those with private student loans are often stuck with the debt, even if they get no value from the education.
If you or anyone you know attended a Corinthian school, getting educated about your options is key. (The CFPB posted information for current and former students here.) So is alerting the CFPB if you feel you were deceived about the value of your education or your career prospects. You can file a complaint here.
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Dear Liz: I have four private student loans that I would love to consolidate so that I can have one medium-size monthly payment instead of four large ones. How do I go about finding a company that will consolidate them?
Answer: If you have good credit and sufficient income — or a willing co-signer — several lenders now offer private student loan consolidation. That’s a change from the recent past, when recession-scarred lenders largely abandoned this market.
Unless you’re able to get a substantially reduced interest rate, though, you shouldn’t expect your consolidated payment to be much lower than the sum of your current payments. Your payment could even go up if the consolidation loan has a shorter repayment period.
You can start your search at cuStudentLoans.org, which represents not-for-profit credit unions. RBS Citizens Financial Group, Wells Fargo, Charter One and other banks offer consolidation options as well. Some lenders offer fixed-rate options and “cosigner release,” which enables creditworthy borrowers to remove a cosigner after a certain number of on-time payments.