Credit Score Rate Update: 6/28/2009 Best FICO® saves $109,000 on a $300,000 30-Yr Fixed

Credit Score Rate Update:

Rates got a little better this week, but the savings difference stayed the same. Still, $109,000 in savings just from jumping from a sub-639 score to a 760+. This equates to $3,660/yr.  That’s like getting over two months of your mortgage paid for every year.

Credit Update: 6/28/2009 FICO® >760•5.120% APR, FICO® <639•6.709%.  Best FICO® saves $109,000 in interest on a $300,000 30-Yr Fixed Mortgage.

June 28, 2009

June 21, 2009

Charts source: MyFICO and Inform Research Services

Michael Jackson’s and Farrah Fawcett’s Families Won’t Inherit Credit Card Debt

We suffered the loss of two great stars yesterday but I have to put on my financial guide cap and assess what the credit impact will be to their families.

In thinking about their estates, one question that arises is the handling of any credit card debt.  Here’s the scoop: As long as their cards weren’t joint credit cards, Farrah’s and MJ’s relatives won’t have to pay credit card debt. Credit card debt cannot be passed on to relatives, as long as they don’t have joint accounts in nearly all cases.  These credit card accounts must be paid off from the estate of each person.  Farrah’s estate can probably afford this, if she had any credit card debt (Michael Jackson’s estate seems to have a fuzzier picture).

For most of us non-celebrities it depends on what’s in our estate.

If you have no assets when you die, the credit card company has nobody to turn to.   Well, not exactly.  Here’s what can happen.  The credit card company can and probably will turn the amount over to a collection agency.  These companies while regulated, will often try to bend the rules to get paid.  In the past, they have tried to convince a relative to pay it off, making what might seem like a logical argument.   But, you don’t need to pay it off.  Be very leery of these collection agencies.  It might seem logical to pay them, but don’t until you check the facts.

First, make sure the account is not a joint account. Next, ask for a copy of the agreement from the credit card company.

Remember, credit cards are unsecured debt instruments.  If your relative dies and there are mortgage payments due on their house and it hasn’t entered probate yet, then there’s a good reason to pay those mortgage bills — it’s a secured loan and the house may be at risk.  Plus, if they have a house, they probably have equity and that will lead to a sale and the disbursement of funds to creditors first.  Credit card companies and other unsecured debt companies are usually at the back of the line on collecting debts from an estate. But, if the money is there, they will get paid.

If there is no estate, or no funds left after paying other creditors, the estate won’t be able to pay off the credit card issuers.  You won’t have to either. You most likely don’t have a legal obligation to pay them.

Try this out:  If they call you trying to collect, ask them to send a legal document showing your legal obligation to pay them.  Tell them you want to present it to a lawyer for review.

In conclusion, don’t pay off a deceased relatives credit cards unless you feel morally obligated to pay them or you can prove you have a legal obligation to pay them off.  Don’t just assume you are on the hook.

Farrah and Michael, rest in peace…

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