10 Ways to Save on Life Insurance

The price you pay for life insurance will depend on your age, your health and your habits. That is to say, forget about a really cheap policy if you smoke, have existing health problems or enjoy skydiving. Still, there's plenty you can do to save on your premium and avoid some common pitfalls. Here are 10 suggestions:

1. Forget Corporate Loyalty
   If you get some life insurance as a job benefit, that's fine. But that should never be all you have. You can't count on keeping it if you lose your job or become disabled and can no longer work. There's no federal law that says your old employer must allow you to keep the coverage, even if you foot the bill. So it's a good idea to use any life insurance you get from work as a supplement to what you buy on your own. If your company allows you to buy additional insurance, be sure to compare rates on coverage you can buy from your employer; more often than not, you can find a better deal on your own, although you'll have to qualify medically to get a policy on the open market.




2. Be Sure to Negotiate
   Kevin Campbell thought he was just being honest a couple of years ago when he told a medical examiner for John Alden that he smokes a cigar about once a year. The Ohio physician, who plays racquetball once a week and jogs regularly, had no history of medical problems.
   
   He figured the insurer would understand that cigars were simply a way to mark special occasions. No such luck. As far as John Alden was concerned, there was no difference between Campbell and a two-pack-a-day man. The company quoted him a $2,150 annual premium for a $1.3 million, 10-year term policy, $1,150 more than the nonsmoker's rate.
   
   But Campbell wasn't having it. He wrote a letter to John Alden demanding a nonsmoker's rate. After three weeks of negotiating, the company caved in and cut his initial quote by 50%. Says adviser Michael Chasnoff, who helped Campbell set up the policy: "When I started in this business, I would have never thought to question what an insurance company told a client. Now I can't see a reason not to." (If you do smoke, 'fess up. If you die of a smoking-related illness, your insurer can choose not to pay your death benefit, opting instead to return to your beneficiaries only paid-up premiums plus interest.)



3. Buy in Bulk
   If you're going to buy $240,000 of coverage, you might as well buy $250,000. If you buy $240,000 worth, you'll pay $274.80 per year. If you buy $250,000, it will cost $260. How's that?
   
   Sometimes more insurance costs less, especially as you approach multiples of $250,000. So, for example, a 35-year-old male nonsmoker buying $100,000 to $249,999 of renewable term insurance from USAA Life would pay $1.02 per $1,000 of coverage. For $250,000 to $499,999 of coverage, the rate drops to 92 cents per $1,000.



4. Health Problems? Seek Out a Specialist
   Forrest Luu, 37, has diabetes. When he set out to buy life insurance, he asked his insurance agent, Murray Halbfish, to shop for a diabetics-friendly company. The best deal Halbfish came up with: Manhattan Life Insurance, which quoted him an annual premium of $891 for $100,000 of whole life. Other companies wanted as much as $1,500. As Luu found out, some companies specialize in particular diseases or lifestyles. For heart disease, cancer or other "impaired risks," companies such as Connecticut National and U.S. Financial offer competitive rates. These companies employ underwriters who are trained to analyze the extent of a given problem. Instead of lumping all diabetics into one group, they rate differences between diabetics who take their medication regularly and diabetics whose disease is out of control. A person whose disease is under control could save as much as 50% on a premium.



5. Don't Get Churned
   That agent who talked you into turning in your old whole life policy for a new one (More coverage! No extra premiums!) didn't do you a favor. In fact, you've been scammed. More often than not, victims of this practice, known as "churning," receive a bill for new premiums within a year or two — after the value in their old policy has been exhausted. But you can get help if you've been ripped off by your agent. Contact your state insurance commissioner to find out how to proceed. Dozens of companies have agreed to compensate victims of these and other illegal practices. Don't forget to complain to the main office of your insurance company directly. Many insurers are now fairly quick to make whole life customers who have been hoodwinked by their agents.



6. Clean Up Your Act
   You may know that you can cut your insurance premium if you stop smoking and lose weight, but you may not know just how much you can save. Well, how does 50% sound? That's right, most insurance companies charge twice as much to insure a smoker. The rewards for getting back down to the right weight for your height can be just as great.
   
   That's what Quotesmith President Robert Bland learned. When Bland, who's five feet, 11 inches and 245 pounds, went shopping for $3 million of term, he got premium quotes ranging from $4,000 to $7,000 a year. When he balked at those prices, he was told that his premium would be more like $3,000 if he were 35 pounds lighter. For the moment, Bland has decided to go with a $4,000 policy from Investors Life of Nebraska. All the same, he's considering losing weight and reapplying.



7. Don't Get Taken for a Rider
   Insurance companies have come up with a host of extras to pad your life insurance bill, most of them not worth the paper they're printed on. Consider the accidental-death rider, more commonly called double indemnity. For about $1 or $2 per $1,000 of coverage, an insurance company promises to pay your survivors double the face amount of a policy if you die in an accident.
   
   But it's foolish to speculate on the manner of your demise, especially since accidental death is relatively rare. If you really want to gamble, buy lottery tickets. Buy enough coverage to support your dependents regardless of the manner in which you shuffle off this mortal coil.
   
   The "waiver of premium" rider is another to skip. Under this rider, which can cost as much as 10% of your annual premium, your insurer will continue your coverage in case you're disabled. But you should already have enough disability insurance to cover living expenses. If you do, you don't need a waiver of premium. Finally, some companies offer spousal or dependent riders that add a term-insurance element to your whole life policy that will cover your spouse or your children. Chances are, if your spouse needs term insurance, you can find a cheaper policy. And unless your child is supporting the family, he or she doesn't need insurance.



8. Know What You're Buying
   Agents call it the "L" word. Life insurance, that is. Some companies teach their agents never to utter the word to prospective clients. Thus you are more likely to hear a host of euphemisms such as mortgage-protection policy, retirement plan and tax-free savings plan.
   
   Don't be taken in. What agents are selling is whole life insurance, pure and simple. In their sales pitches, agents like to emphasize the tax-free accumulation of cash value in a whole life policy but what they don't tell you is the down side: High commissions, seemingly endless payments before any sizable cash value is accumulated and murderous penalties if you want to get out early.



9. Try a Low-Load Company
   It's a dirty little secret that insurance agents don't want you to know. But some companies sell life insurance at little or no commission. That can mean big savings for you, if you're the type who doesn't need much handholding to make a decision.
   
   A few of them even sell whole life policies this way. Ameritas (800-552-3553) is a leader in the low-load business with hard-to-beat rates on all types of policies. For example, a female, age 30, can buy $250,000 worth of coverage for just $162 a year. Northwestern Mutual (414-271-1444) is a traditional insurer that sells some low-load policies through its agents. It has some of the best prices around, particularly on whole life policies.



10. Avoid Hidden Fees
    Convenient monthly payments, automatically deducted from your checking account. What an easy way to pay your life insurance premium. But before you sign up, ask a simple question: What's this going to cost me? At many insurers, the answer is plenty. Metropolitan Life, for example, charges some life policyholders fees equal to 15% to 20% of the annual premium simply for the privilege of making monthly payments. Charges like these are often built into the payments, so you may not even know they put the bite on you.

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Life Insurance Blunders to Avoid

Other than insurance salesmen, no one likes to talk about life insurance. After all, no one wants to be reminded about their looming death. However, it's hard not to suspect that keeping this subject taboo is more in the interest of insurance companies than consumers. Better informed buyers are more likely to spend wisely. And like dentistry, life insurance can't be ignored forever.

Five for the Money usually advises readers on how to spend or invest wisely. This week, we're twisting it slightly to look at some of the biggest mistakes people make after inhaling deeply and deciding that as adults, they should probably pick up some life insurance.

• Don't buy the wrong amount
  
  There are rules of thumb about exactly how much life insurance one needs, with 5 to 10 times an annual salary being a common guideline. But these numbers should be taken for what they are: very general numbers. They don't account for an individual's requirements. "The need that we're often talking about is an income replacement," says David Greene, of financial planning firm Cooper, Jones & McLeland, so that survivors don't encounter financial havoc in the wake of a loved one's death.
  
  Starting from the conventional wisdom, Greene says policy holders with a good pension might be able to get by with less than the standard amount. A more common problem is not buying enough—this is even truer in cases where small children are involved. Greene and other experts caution that lump-sum payments that look substantial on paper often don't add up to much compared with a consistent salary spread over many years. Then again, it's hard to imagine too many complaints about receiving too much insurance money.



• Don't trust just any insurance agent—shop around
  The life insurance options available are dizzying. Charles Massimo, president of CJM Fiscal Management, which works with wealthy clients in Garden City, N.Y., advises against limiting yourself to insurance advisers who are "captive" to one company. This is doubly true for people worried about their health. Insurers calculate risk factors independently of each other, so they won't all give health conditions such as heart disease the same consideration in evaluating an application. "Some [companies] are more aggressive with different risk factors," Greene says. A good place to compare offers from different insurers is Insure.com.
  
  Weighing your options doesn't end with the purchase of a policy. "The standard is, people buy insurance and they put the deposit in the safe-deposit box and never look at it again," Greene says. That's a mistake. The fact is people's circumstances change, and so do the offerings from insurance companies. The policy that best fit your circumstances five years ago might not always be the right choice.



• Don't be cagey
  Most people would rather not talk about their life insurance, what with its intimations of mortality and the implication—still considered tacky in some circles—that a dollar amount can be placed on human life. But if holders don't talk about their policies with the beneficiaries, letting them know what company holds the policy, if not the amount, something worse can happen: Human life becomes worth no dollar amount at all.
  
  Sometimes survivors simply don't know about the deceased's policies, says Steven Weisbart, an economist with the Insurance Information Institute. "It happens much more than it should," he says.
  
  Corporate consolidation can also complicate matters. A policy bought 40 years ago could have been through an outfit that has since been assimilated by an insurance giant. Insurance companies, Weisbart says, like to pay out on policies as it makes for good public relations. Even so, it "becomes very hard to make a claim unless you've got good documentation," he adds. Not knowing where to begin can't help.



• Don't forget, the world goes on
  One of the hardest things for life insurance policy holders to realize is that they'll no longer be around when the insurance pays out. The purpose of it is to protect their immediate family or beneficiaries.
  
  Weisbart says insufficient foresight can hurt relatives. For example: Say a policy holder's spouse receives health insurance from the policy holder's employer. In planning how much a life insurance policy pays, then, the primary caregiver should account for the spouse no longer receiving health insurance. In a slightly less dramatic example, buyers should remain aware that the cost of big expenses like college will continue to increase after they pass away.



• Don't depend on employer insurance
  When asked about life insurance, it can be easy to choose a policy provided by an employer with the premium deducted from a paycheck. But those policies can often provide a false sense of security. Among their other problems, they sometimes expire at retirement, when buying a more comprehensive policy could be more costly.
  
  Worse, group life insurance is less tailored to an individual's health and needs. And often, the policy isn't worth enough money, Weisbart says. "Most group life coverage [plans] are really pretty modest, one or two times salary," he says. "In relation to what [beneficiaries] need, it's not a lot of money." In the end, buying the wrong policy can leave your family shortchanged.

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Long-Term Care Insurance: Understand Your Options

Although America as a nation is aging rapidly, many people avoid thinking about the day when they or a loved one will need long-term care services and, therefore, fail to plan. Others wrongly assume that Medicare or standard health insurance policies will cover the costs of long-term care services. This article provides an overview of long-term care insurance, covering issues such as when to purchase coverage and what to look for in a policy.

1. Long-Term Care Insurance

The aging of America is one of the biggest factors contributing to the growing interest in long-term care (LTC) insurance. According to U.S. Census Bureau data, the median age in America has been rising and the last of the 76 million Baby Boomers will reach age 65 by 2030 -- doubling the elderly population in America.
The U.S. Department of Health and Human Services estimates that about 40% of people aged 65 or older have at least a 50% lifetime risk of entering a nursing home. For its part, the Health Insurance Association of America estimates that by 2020, 12 million people may require long-term care.

At a time when the average cost of a private room at a nursing home tops $74,000 a year, long-term care insurance can be a solid investment for individuals who have assets they want to protect or who want to avoid becoming a financial burden to their family. But unlike other types of insurance, in which policies are standardized or fairly straightforward, long-term care policies are complex and vary widely. Virtually every company's policy differs on such matters as who qualifies for coverage, when the policyholder can begin receiving benefits, the amount of coverage, the term of the policy, and premium costs.

Before you begin comparing policies on a feature-by-feature basis, it is important to understand some of the basics.


2. What Long-Term Care Insurance Is -- And Is Not

Long-term care insurance is not life insurance, disability insurance, or health insurance. Instead, LTC includes a range of nursing, social, and rehabilitative services for people who need ongoing assistance due to a chronic illness or disability. LTC insurance can be used by anyone at any age who suffers an accident or debilitating illness, but it's most frequently used by older adults who need assistance with essential physical needs, such as bathing, dressing, or eating.

For the most part, those who need long-term care are left to foot the bill on their own. Neither Medicare, nor Medicare supplemental coverage, also known as Medigap insurance, nor standard health insurance policies fully cover long-term care. That leaves most of us with two options when faced with such expenses: pay out-of-pocket or rely on private long-term care insurance.

Most LTC policies are "expense-incurred" or indemnity policies, which pay a fixed-dollar amount toward the cost of daily care. Policies tend to cover a variety of care settings, including nursing homes, home health care, assisted living facilities, and adult day care. Since premium costs increase depending on your age at the time of enrollment, the younger you are when you purchase a policy, the lower the premium you'll pay during the life of the plan.

Once you purchase a policy, premiums generally remain the same each year, so experts recommend that individuals start thinking about long-term care long before they need it. Because long term care insurance premiums are based on age at the time of purchase, the younger you are when you purchase a policy, the less expensive it typically will be.


3. Shopping for Long-Term Care Insurance: Consumer Guidelines

When shopping for long-term care insurance make sure you take your time and compare the features of several policies. State insurance regulators and the American Council of Life Insurance, and the Amermican Health Care Association recommend that you pay special attention to the following features.

Company Reputation and Legitimacy. Make sure the insurance companies under consideration are licensed in your state and that they carry favorable financial ratings from well-known ratings agencies such as A.M. Best Company, Duff amp; Phelps, Inc., Standard & Poor's Insurance Rating Services, and Moody's Investor Services, Inc.

Coverage Parameters. Policies will differ in the types of services they support. Some cover nursing home care, others cover custodial or personal care in a variety of settings such as assisted living, adult day care, and home health care. Some include a combination of services. Be sure to choose a policy that best meets your particular needs.

Benefits Payout. How much does the policy pay per day for care in a particular setting (e.g., nursing home, assisted living)? How does the policy pay out services (e.g., a fixed daily amount, as reimbursement for the cost of care up to a daily maximum)? Does the policy have a maximum lifetime limit? If so, what is it for nursing home care? Home health care?

Waiting Period. How long must the insured wait before he or she can begin receiving benefits? Most policies range from zero to 180 days. Typically the longer the period, the lower the cost of the policy.

Eligibility. Does the policy use certain benefit triggers to determine when you will be eligible to receive benefits? Such triggers could include activities of daily living that the insured needs help with, such as bathing, eating, and dressing; cognitive impairment, such as Alzheimer's disease; or a prerequisite hospital stay for nursing home benefits.

Benefits Protection. The policy should include an inflation adjustment feature to ensure that benefits stay in line with rising care costs. Determine what the rate of increase is, how often it is applied, and for how long. Additional protections include a "guaranteed renewable" clause, which states that the policy cannot be canceled when you get older or if you suffer physical or mental deterioration, and a nonforfeiture benefit, which ensures that some portion of your benefits are still available to you if you cancel your policy or unintentionally let it lapse.

Tax Implications. Most long-term care policies sold today are federally tax-qualified, which means premiums paid, as well as out-of-pocket expenses for long-term care, can be applied toward the 7.5% medical expense deductions contained in the federal tax code. Additionally, long-term care benefits received are not taxed as income up to certain limits. Consult with a tax advisor to learn more about the tax implications of long-term care insurance.

Because of the many variables involved in determining whether long-term care coverage is right for you, it is important to do your research. Luckily there is a wealth of information available to consumers on long-term care and related health care issues. A good starting point is the American Health Care Association at www.ahca.org.

Summary

• The aging of America, and the increasing health care expenses that will follow, are the biggest factors contributing to the growing interest in long-term care insurance.

• Demographers predict that a third of all people who reach age 65 will need to enter a nursing home at some point in time.

• Today the average cost of private nursing home care in America tops $74,000 a year, making private long-term care insurance a potentially smart investment for individuals who want to protect assets and avoid burdening their family.

• In general, long-term care insurance covers a range of nursing home and community-based personal care services for individuals who need ongoing assistance due to illness or disability.

• Neither Medicare, Medicare supplemental coverage, nor standard health insurance cover long-term care expenses.

• Premium costs increase as you age, so the younger you are when you purchase a policy, the lower the premiums you'll pay during the life of the policy.

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McCain defends retirement accounts amid stock dive

McCain, aides defend idea of private Social Security accounts amid Wall Street turmoil, Wall Street turmoil left John McCain scrambling to explain why the fundamentals of the U.S. economy remained strong. It also left him defending his support for privately investing Social Security money in the same markets that had tanked earlier in the week.


The Republican presidential nominee says all options must be considered to stave off insolvency for the government insurance and retirement program, and top McCain advisers say that includes so-called personal retirement accounts like those President Bush pushed in 2005 but abandoned in the face of congressional opposition.

The aides tried to soothe voters concerned about the bankruptcies, takeovers and bailouts on Wall Street by declaring McCain favored only the option of such accounts, just for younger workers, and most likely in a conservative investment vehicle such as bonds.

Private accounts for Social Security are "always an easier sell when the markets are going up instead of going down," said David Wyss, chief economist at Standard & Poor's. "I don't think this is a good week to sell that one politically, but you're looking at the long term here. You're investing your retirement funds for 20 or 30 years down the road."

A headline Friday in the Manchester, N.H., Union Leader, the leading paper in that battleground state, underscored the political challenge. "Pension funds for workers take a hit," read a story about a roughly $500 million decline the past three months in the state's public pension fund.

Democrat Barack Obama opposes the accounts and has warned they could be a precursor to eliminating the government entitlement program. Critics also note that one of McCain's top economic advisers is former Texas Sen. Phil Gramm, a free-marketeer who pushed the idea of a privatized retirement system as far back as 1988.

Obama, a senator from Illinois, has suggested shoring up the program by imposing a Social Security tax of no more than 4 percent on earnings above $250,000; currently, only the first $102,000 in income is subject to the tax. Income in the "doughnut hole" between those figures would not be taxed.

McCain calls such a tax punitive and counterproductive. He also says refusing to discuss private accounts amounts to political posturing. He says his willingness to broach the subject is emblematic of his "Country First" campaign motto and harkens back to bipartisan discussions between President Reagan and Democratic House Speaker Tip O'Neill Jr. the last time the system was revamped in 1983.

"We have to have some straight talk for America. The Social Security system is going to go broke. It will not be there for present day men and women who are working. And we have to fix it and we have to do it in a bipartisan fashion," the Arizona senator said Wednesday during a town hall meeting with running mate Sarah Palin in Grand Rapids, Mich.

He added: "We have to realize that the worst thing we can do is continue to allow these unfunded debts to mount, and to pass on to another generation of Americans a burden that we've imposed on them."

McCain aides bristle at talk of "privatizing" the Social Security system.

"He's not ever talked about outsourcing Social Security into the private sector," senior adviser Steve Schmidt told reporters Thursday. "What people talk about with regard to personal accounts is giving the American people an ability to have a greater return on an investment -- it could be bond funds, for example."

Wyss, the Standard & Poor's economist, said the concept of supplemental private accounts is valid, but there are so many variables in constructing them it makes discussion difficult. He also warns that it's too late to make changes for the Baby Boom generation, which has begun retiring. That is reducing the number of workers paying into the system at the same time there is an increase in benefits being paid out.

By about 2020, more people will be drawing on the system than will be paying into it, and the government projects Social Security could be insolvent around 2040. Those projections change slightly each year.

"I think it's a good idea, but again, it doesn't solve the immediate problem," said Wyss. "And you also have to make sure you maintain an adequate safety net because you don't want people eating cat food in retirement."

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What You Need to Know About Credit Scores

You've probably realized by now that your principal in high school was full of it when he or she warned you about your "permanent record." There is no such thing.

But there is, in a way. It has nothing to do with cutting class or smoking out by the football field. It's called your credit report, and it shows your current credit accounts, outstanding debts, and payment history going back for several years. Credit cards, student loans, auto loans: They're all there, and if you have a problem paying any other kind of bill or have an overdraft on your checking account, it will show up, too.

High Score

So why is this important? Well, credit reports yield credit scores, a powerful little three-digit number ranging from 300 to 850. A bad credit score -- less than 620 is considered subprime -- will have you paying 10.99 percent interest on a car loan when your friend with squeaky-clean credit is paying 6 percent, or 29 percent on a credit card when your friend's card charges 12 percent.

Credit scores can also affect your rates for mortgages and home, auto, and life insurance.

And increasingly, bosses are conducting credit checks when they make hiring decisions.

Credit scores are a great scam for the credit card industry. Without fail, when I give a talk on college campuses about the dangers of credit cards, someone in the audience asks, "But don't we need a credit card to build a good credit score?" And I have to say, well, yes. You need those credit cards to get a mortgage or an auto loan down the road. But you don't have to run up any balances! The most cautious thing to do is to use your credit cards to make a regular payment, like a cell phone bill, and then set up automatic bill paying online each month.

There are lots of businesses, some fraudulent, offering to "repair" your credit.
But as the Federal Trade Commission wants you to know, self-help is the best approach. Here's what you can do:
The Score Decoded

Requesting your credit reports and scores is a good way to start taking control of your money. There is one most common credit score used by banks to make decisions: the FICO score, developed originally by Fair Isaac Corporation.

FICO scores, once again, range from 300 to 850. Three different credit bureaus combine information from credit card companies and banks to make credit reports: TransUnion, Experian, and Equifax. Each of these bureaus may have slightly different information on you in their reports, which yields a different score. The Equifax score is seen by some as being most similar to what banks actually see when they pull your credit report.

By federal law, you are entitled to one free copy of your credit report each year from each of the credit bureaus. Go to annualcreditreport.com to request them. You will have to pay about $7.95 a pop to see the scores as well.

To write this column, I pulled my free credit report from TransUnion. It's pretty easy to read, showing my name, Social Security number, and current address, as well as two previous addresses and the payment history for my credit cards: a Capital One Visa, a Chase/Bank One Visa, and a Washington Mutual card that I've since canceled. I don't have any balances on the cards right now, and I have made nearly all on-time payments. But my credit score is only 705, shy of the "excellent" cutoff of 720.

This is primarily because last year I traveled out of the country, moved apartments, and forgot to pay a $40 charge on my Capital One Visa. The payment went overdue for 90 days, until Capital One finally reached me on the phone. So now I am patiently repaying my cards on time each month, via automatic direct debit, and waiting for my score to improve. On the advice of TransUnion, I'm also going to open another credit card to increase my available credit, which could help improve my score.
The Breakdown

Your credit score is based on several factors, many of which will hit Generation Debt harder than older folks.

1. Payment history -- the biggie, about 35 percent of a FICO score. Also the no-brainer: Any late payments or overdrafts, like mine, will ding your credit score for several years.

2. Amount owed -- about 30 percent

This figure compares the amount you owe to your available credit. So someone who has a $2,000 balance and a $2,000 credit limit -- they're maxed out -- will look worse than someone who owes $3,000 but has cards with $30,000 worth of limits. This may hurt folks with large student loan balances. It's also the reason that you don't necessarily want to close accounts after you pay them off -- it's better to leave them dormant to raise your available credit.

3. Length of history -- about 15 percent

The longer your perfect record of on-time payments, the better your score -- so if you've only been out of school for a couple of years, your credit score won't be as high as it can be down the road if you keep it clean.

4. New credit -- about 10 percent

Repeatedly shopping for credit -- either credit cards or bank loans -- can hurt your score because it makes you look desperate. I learned this the hard way when I got out of college. I had smugly avoided signing up for a student credit card. Well, suddenly I was a freelance writer's assistant, with no regular income. I applied for and was rejected from so many cards in the first few months out of school that I was told I couldn't file any more applications for six months. I finally got a Capital One Visa with a $300 limit. All of this probably hurt my credit.

Message: Confine your credit card shopping to 30 days, and, yes, get a student card if you're in school.

5. Miscellaneous-- about 10 percent

This includes stuff like having a nice "mix" of credit cards, auto loans, and other types of credit.

Mr. Fix-It

First, make sure your report has no mistakes. The Public Interest Research Group found in 2004 that 79 percent of credit reports had some kind of mistake. One out of four had a serious error that could lead to denial of credit.

If you're young and have never requested it before, your credit report may contain information from someone else with the same name. Or there may be duplicate information.

Evan Hendricks, an expert who wrote the book "Credit Scores and Credit Reports", told Bankrate.com that student loan borrowers especially have to watch out:
"Student loan information will sometimes multiply like rabbits on the credit report because student loans are sold from one company to another, and the old company continues reporting and then the new company continues reporting it, and it might make it look like you have more loans than you actually do. Then if they're showing any late payments, you can get hit with double whammies on late payments as well."

If you have a mistake, you need to send a dispute letter to the credit bureau and ask them to "reinvestigate" it. Include copies of any supporting evidence like your drivers license. Keep records of everything in writing. You can also request that the bureaus include a note in your file to help explain any delinquencies -- e.g., you were taking care of a sick parent or were unemployed. "Credit Scores and Credit Reports" has all the info on how to do this for free, yourself.

If your credit report is accurate, do what I'm doing now. Set up automatic direct debit to pay all your bills on time, on the day they're due. Start paying down your credit card balances, starting with the highest-interest cards, paying at least $10-$15 over the minimum each month. But don't close any accounts -- remember, you need a high ratio of available credit to used credit.

Take courage. It doesn't happen overnight, but after seven years, most blemishes on your credit report -- even bankruptcies -- are erased by your most recent payment history. Take comfort in the fact that there isn't really a permanent record after all.

by Anya Kamenetz

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