How an unexpected credit cut can signal a serious problem

Dear Liz: I pay for all my credit card purchases online, usually within a few days. My monthly balance is usually $0, although I use the card often. The card is my only open credit account. I recently checked my credit score and it fell below 650. A few years ago it was over 800. Is my diligence hurting my score? Do I have to wait for the statement to be released to pay my card? Is there another way to improve my credit score?

Answer: A drastic drop could indicate a more serious problem, such as B. a late payment or a collection bill. Check your credit reports with all three credit reporting agencies at AnnualCreditReport.com. (Be sure to type the exact name into your browser, as there are many similar sites that will try to charge you for free access to your reports. If they ask for a credit card number, you’re on the wrong site.) An unexpected drop in credit score can be an indication of fraud, so do it as soon as possible.

If you don’t see anything suspicious, you can probably blame your habit of leaving a zero balance and only having one card. You don’t have to have credit card debt to get good scores, but a small balance at the statement close date helps the credit score formulas indicate that you’re actively using your account. You can and must pay the balance in full before the due date to avoid interest charges. Adding another credit account or two should further improve your score.

You didn’t mention what score you saw (you have many) or where you got it, but consider keeping at least one of your scores so you can measure your progress. Banks and credit card companies often offer free scores. If this isn’t the case for you, you might want to consider signing up with another service that offers free sheet music. For example, Discover offers free FICO scores to everyone, not just its own customers.

Living Trust start-up costs

Dear Liz: A friend of mine contacted an estate planning attorney to build a living trust. The attorney gave her an estimate of $5,900 for the job. My friend is single, never married, has no children, owns no property or business. She does not have complex financial situations. She has a financial planner with which she works on her investments and pension funds. I’m also considering working with a lawyer and my situation is similar to my girlfriend’s – very simple. However, I can’t afford $6,000 to make a will. Is that a reasonable price for a basic home? That seems high to me; Should it be more in the $2500 range?

Answer: Your friend’s experience is why many people put off estate planning or opt for do-it-yourself solutions when they could really benefit from the advice of an experienced lawyer.

Let’s start with this: not everyone needs a living trust. Living trusts are designed to avoid probate, the legal process used to administer estates. But parole is not an issue in many states. Even in states where probate proceedings are notoriously slow and expensive, such as California, there are simplified procedures for small probate proceedings. In addition, there are a number of options other than a living trust to avoid probate litigation, including death payment designations for financial accounts and, in many states, transfer on death options for vehicles and real estate.

Life trusts have other advantages: they are usually private, while wills must be made public after death. And living wills usually include a relatively easy way to let someone else make decisions for you if you’re disabled. But you can set up something similar by creating powers of attorney for health and finance. These documents, along with a will, typically cost less than $1,000.

There are online legal self-help options you can use to make estate plans on your own, and some give you access to attorneys for help. Ideally, however, you will find a lawyer who, for a reasonable fee, will investigate your situation, advise you personally and prepare the necessary documents for you. If you’re having trouble finding someone, ask an accountant or financial planner for recommendations. If finances are an issue, avoid law firms with large, posh offices in expensive boroughs and look for firms with more modest overheads in outlying areas.

All in all, the amount your friend mentioned might make sense if she has a lot of money. Even without real estate investment, significant wealth requires extensive estate planning, and that comes with a significant price tag.

Liz Weston, a certified financial planner, is a personal finance columnist geek wallet. Questions can be directed to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact Us” form at askliweston. com.