DEAR BRUCE: My credit score recently dropped more than 100 points, but none of my habits have changed in the last six months. My score has been in the 760-780 ranges for quite a few years. I make it a habit to check my score quarterly. Last week, I noticed it has moved to the mid-600 range. I have three credit cards with a line of credit of about $60,000. Two of them carry a zero balance, and the other has a balance of $3,200 with a zero percent rate. The last loan I took out was last summer for some furniture that I financed at zero percent for three years, and that's the only change within the past couple years. I can't understand why my score has changed. Is it the economy that caused the readjustment of credit scores? Are they using new criteria to establish scores? Where do I turn to investigate this sudden change? -- Jim, via e-mail
DEAR JIM: You say nothing has changed in the last six months and that you check your score quarterly. Are you checking your credit reports as well? There may be inaccurate information that may have been added by mistake, by another creditor or money owed by someone else. There are a whole lot of things that can happen very rapidly. It also may be because of the inactivity on your two cards; that has had an adverse affect on your score. If you have the cards, you should use them periodically for small purchases, and pay them on time so you accumulate no charges. Letting them sit dormant for whatever reason can work against your score. The first thing I would do is pull all three credit reports and make certain all of the information is accurate. If this doesn't give you any reason why the score has dropped so dramatically, the next thing is to write to the credit reporting agencies (they all have their own scores) and also to FICO for an explanation.
DEAR BRUCE: My wife had an interesting idea and I would like your opinion. We have a home with a mortgage at 5.75 percent, which is on 5 acres that is partially surrounded by another 20 acres we own free and clear. Would it be prudent to secure a loan on the 20 acres and pay off the mortgage on the house and 5 acres? In these economic times, we could reluctantly allow the land to be foreclosed but would still have our house. -- G.T., via e-mail
DEAR G.T.: Interesting idea but very likely not workable. Most mortgage companies will not give a mortgage on unimproved (no buildings) property, for the very obvious reason that the unimproved property would be the first thing that a borrower in trouble would allow to go unpaid. Further, even if you did what you've described and can get away with it, if you didn't pay the mortgage on the 20 acres, would not the mortgage company come after you and get a judgment against you and put a lien on your home? I suspect that they would. How would you explain to them why you wanted to borrow the money on the 20 acres to pay off your mortgage? I think they would smell a mouse. In short, it's an interesting idea but I don't believe a workable one. If there is a market, you could sell the 20 acres and use the proceeds to pay off your mortgage. That might be the best way to go if you are really concerned.
DEAR BRUCE: I am an officer in the military stationed abroad. Is it smart to buy land now so that we can build a retirement home in about 14 years? I plan on being retired from the military at that time, but I will have a post-military career. What factors should I consider before making a decision? -- C.B. via e-mail
DEAR C.B.: I would not purchase land looking that far ahead. First of all, land is an alligator: It eats. You will have to pay taxes, you must have the land insured in case someone gets injured on your property, and, furthermore, since you are not around, you have no idea in which direction the community that you purchased this land in is headed. Where they will develop the utilities and so forth. It is far better in my view to continue to invest your retirement money in the marketplace. When the time comes, then you can purchase the land. Fourteen years in advance would be a very risky endeavor.