Borrowing to pay back isn’t best way to raise your credit score

Dear Liz: I am trying to improve my credit score quickly. I have been offered a $5,000 loan from my bank. I would like to use $3,000 to pay off 70% of my credit card debt so that my remaining balances are at or below 30% of the card’s credit limits. Then I would like to use the remaining $2,000 to pay back 40% of the $5,000 loan. It seems like this would help my score, as all of my credit card balances are brought down and the personal loan is at only 60%. Will this idea actually help my credit or make it worse?

Answer: Lowering your balance-to-limit ratios should help your credit scores (and hopefully your wallet, if the interest rate on the loan is lower than what you’re paying on your cards). The credit scoring formula isn’t as sensitive to amounts owed on installment loans, however, so there’s no real need to borrow more money simply to pay it back and lower your balance owed.

What you really need to do is discover why you maxed out your cards in the first place. If you haven’t solved the overspending problem that led to this debt, just shifting balances around will be a short-term solution. You’ll quickly run up more debt and be right back where you started, except deeper in the hole.

A guidebook for executors

Dear Liz: Though there seems to be an unlimited number of books and seminars concerned with establishing a family revocable trust or living trust, there also seems to be a shortage of information on the steps a person would take to settle and distribute the proceeds of the trust when the last trust creator dies. Lawyers seem reluctant to reveal the legal steps required. Are you aware of a good publication with a minimum of legalese?

Answer: The book you’re looking for is “The Executor’s Guide” by attorney Mary Randolph from self-help legal publisher Nolo. The book, currently in its fourth edition, outlines the duties of someone who settles an estate or trust, offering a week-by-week and step-by-step guide. You’ll find the book in regular bookstores, online bookstores and at Nolo’s site, at https://www.nolo.com, both in physical form and as an e-book.

The job can be complex and you could be liable for any mistakes, which is why many people choose a lawyer’s help. Such help is all but a necessity if you’re dealing with a large estate (more than $1 million) or with contentious relatives. Even then, “The Executor’s Guide” can give you a clearer idea of what’s involved.

Ways to cut cable, cellphone fees

Dear Liz: My cable and cell companies decided this month to hike their fees on me. Do I have any recourse? It’s not like I’m getting more service for their fees (that I know of) or am automatically getting a raise.

Answer: Cable and cell companies have competitors. Start by calling one of the satellite television providers and asking what specials it offers new subscribers. Then call your cable company and let it know you’re thinking of switching. Whatever the first offer is, hold off and see whether you can get a better deal. If not, switch or consider a life without pay television. Many popular shows are available free on the Internet, while others can be purchased as downloads. If you don’t watch much TV (and you’ve got lots of better things you should be doing, right?), you can save a lot of money.

Cell service can be a little trickier, particularly if you’re in the midst of a long-term contract. Consider using BillShrink or Validas (at https://www.myvalidas.com) to see whether you can get a better deal from your current carrier. If you’re not using all your minutes, text and data, your carrier typically will let you step down to a cheaper plan without extending your contract (check to make sure, of course).

If you’re not under contract, the world’s your oyster. Those two sites can help you search among the carriers to find the best fit for the way you use the phone. Or you could consider switching to a prepaid plan with no contract.

Liz Pulliam Weston is the author of the book “Your Credit Score: Your Money and What’s at Stake.” Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., No. 238, Studio City, CA 91604, or via the “Contact Liz” form at https://www.asklizweston.com. Distributed by No More Red Inc.