Magazine article Medical Economics

Money Management Q&A

Magazine article Medical Economics

Money Management Q&A

Article excerpt

How credit counseling affects your score

I mishandled my credit card debt while in medical school and may need help from a credit counselor to get it straightened out. Would consulting one help or hurt my credit score?

That information isn't factored into your FICO score, so consulting a counselor for advice will neither help nor hurt you. But don't confuse counseling with more hands-on assistance, such as a debt management plan or debt negotiation. With a debt management plan, a credit counseling agency works out a payment schedule with you and your creditors and makes the payments for you from cash that you deposit with the agency monthly. As their name implies, debt negotiation firms try to reduce the balance you owe to creditors. But both strategies, particularly debt negotiation, involve risks and can have a negative impact on your credit record. For more details see "Fiscal Fitness: Choosing a Credit Counselor," available at line/pubs/credit/fiscaLshtm.

Don't count on float when writing checks

I paid for groceries by check on a Saturday, then realized on Sunday that I didn't have enough cash in the account to cover it. I immethately transferred money from savings to the checking account by phone, but the supermarket check had already bounced. How did it dear so fast?

Rather than depositing your check in the bank on Monday morning, the supermarket processed it on-site as an electronic fund transfer. Your supermarket receipt probably includes a notice telling you that by presenting a check you're agreeing to that form of payment. The merchant also should have a sign posted in the store to alert you that it handles checks this way. If you normally get your canceled checks (or images of them) back from your bank with your monthly statement, this check won't be among them. The same thing can now happen with checks you mail, so don't count on having a few days' float when you write a check. …

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