DEAR BRUCE: Shortly after I had our first child in 2005, my husband lost his job and I began to have financial difficulties. I would manage to pay most of the bills, leaving only my credit card unpaid each month. After the first few months, I did pay some money toward the card, but was not able to pay the whole amount. It took six months to clear the overdue payments. Even though I kept up with my personal-loan payments, the credit-card delinquency has tarnished my record. I am now unable to get even the smallest of loans. What can I do and how long will it take to improve my credit rating to the point where I can apply successfully for a loan? -- L.A., Miami, Fla.
DEAR L.A.: You have learned the hard way, as have many others, that credit can take a long time to build up but can be destroyed in a short period of time. The fact that you had this poor repayment history for six months to a year is going to stay with you for many years. That's the reality. You will find that after a period of time some creditors will loan you money. For example, many automobile companies do not underwrite as carefully because their primary function is to sell cars. The same thing can be said for many other direct-financing arms, which sell home furnishings, appliances, etc. It is an arduous process. For a young person, there is life after bad credit, but it does stay with you for a long time. One thing's for sure: Avoid those companies that say they can clear up your credit for a fee. You will only end up a little poorer than before.
DEAR BRUCE: I am 33 and have a 9-year-old child. I would like to start saving for his college years. I've spoken with an investment adviser, and she told me to invest in a Roth IRA, rather than a specific college plan. Her reasoning: I want to save money for college, but if my child decides to do something other than college, I wouldn't be taxed so heavily on the money. I could withdraw it to make any necessary purchases in the future -- a car for my child (when he's old enough), for example. I want to keep making contributions after my child is finished with college and save it toward my retirement. Is this a good idea? Or should I have two separate accounts? -- K.J., Detroit, Mich.