A free way to monitor credit on a regular basis
Few consumers know it, but each of the nation's largest credit bureaus must provide a free credit report each year. Spacing out the freebies is a good way to monitor your file on an ongoing basis.
Q. I am hoping to buy my first house, and I want to get a copy of my credit report before I start shopping for a mortgage to make sure the report doesn't have any errors on it. You recently explained how consumers can get one free copy of their report each year from the three major credit bureaus. Which bureaus are they? Also, am I entitled to only one report from the three, or can I actually get three free reports annually one from each?
A. The nation's three major bureaus are Experian, TransUnion and Equifax Inc. Federal law says that you are entitled to get one free copy annually of your report from each of them, which essentially means that you are entitled to get three “freebies” per year.
As I wrote in that earlier column, the best place to order your free report is from www.annualcreditreport.com. It's the Internet site jointly operated by the three agencies, and you don't have to sign up for an expensive credit-monitoring plan to get a copy. The group's toll-free phone number is (877) 322-8228.
When you visit the website or call, you'll be asked which agency you would like to provide your report. You could technically order a copy from each of the three at the same time, but that rarely makes sense, because they would all include the same basic information.
A better idea is to space your requests to annualcreditreport.com over four-month intervals. For example, you could select TransUnion to provide the report in January, Experian in May and Equifax in September. You could then start the process over again when next January comes around.
To be sure, following this strategy may not yield the same results as paying $100 or so each year to a credit-monitoring company that will check your files on a more regular basis and (supposedly) alert you if something seems awry. But it works for most people especially those who have a relatively stable credit rating and aren't paranoid about identity theft and it won't cost a dime.
Q. We spent $9,275 to remodel our kitchen in October. Can we deduct the cost on our next income-tax return?
A. Probably not. The Internal Revenue Service generally does not allow an immediate deduction for such improvements, unless they are considered a qualified “fix-up” expense to get the property sold or were incurred to accommodate a person who is disabled.
If the remodeling job doesn't fit into either of those two categories, you can add the $9,275 in remodeling expenses to the “tax basis” of the house and thus reduce or eliminate any taxes that might be owed on the profit when you eventually sell.
Q. I'm in bad financial shape, and my bank has started foreclosure proceedings against me. A company has sent me a flyer stating that it will “guarantee” to stop the foreclosure if I pay it $2,500. That's about all of the money I have in savings right now, but I would spend it if it would save my house. Are such offers legitimate?
A. You didn't give me the name of the company that sent you the flyer, but I would be very wary of its offer. No one absolutely no one can “guarantee” that they can stop foreclosure, and such bogus promises are often made by companies who search out desperate homeowners through courthouse filings and then try to fleece them out of what little cash they have left.
If you haven't talked with your lender yet, contact it immediately to explain your financial problems and see if it can provide some kind of help. Many lenders today are awash in foreclosures and are anxious to avoid adding any more, so they're more willing to negotiate than they were in the past.
Such aid can come in a variety of forms, including a temporary reduction or even suspension of payments. Or, you might qualify for the federal Home Affordable Modification Program, commonly called “HAMP,” which provides a variety of loan-modification and refinancing plans to help owners save their property.
You can get more information about HAMP by visiting www.makinghomeaffordable.gov or by calling 1-888-995-4673. The HAMP website and its phone representatives also can put you in touch with a government-certified loan counselor in the area who will provide free, comprehensive details about various options that could save your home.
I'm sorry to hear about your current financial problems and hope they clear up soon.
For the booklets “Straight Talk About Living Trusts,” or “Free and Clear: Getting the Mortgage Monkey off Your Back,” send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960
© 2010, Cowles Syndicate Inc.