Is it better to save for a house or pay off debt?

No matter how much house you can afford, buying today is risky. It’s not clear whether we’re closer to the end of the housing slump than the beginning. (Your real estate agent will no doubt have an opinion on this, but that’s all it is. No one really knows.)

If the worst is over, you could be getting the bargain of a lifetime. But if house prices keep falling, you could easily see your hard earned savings wiped out as the drop in the value of your new house wipes out your down payment. Unless you plan on staying put long enough for the housing market to recover — which could take years — you may be better off renting.

My daughter is in college. Her credit score is a 458. Last year, she had no credit score. Unfortunately, she has had medical bills that are on her report. She had one credit card that she paid out and closed. Her other credit is local. How can she raise her score?
— Sandy F., Big Sandy, Tenn.

First thing is to get copies of her report form all three credit agencies. You can get one every year from annualcreditreport.com. Be sure to use this site only. There are a lot of pretenders who will figure out how to charge you. This one was set up by the three credit agencies as required by a 2005 federal law.

Check the reports and make sure the information is accurate. You may be surprised how bad these records are. (We’ve done this several times and found mistakes.) If you find errors, contact the agencies and have them corrected. You may have to provide them with a written statement or proof of the error. They’re supposed to follow up within 30 days.

It’s important to check all three reports because each agency works a little differently. They also score your credit history a little differently. To find out your score, you’ll have to pay a small fee — only the information in the credit report is free.

If the info is accurate and the score is still low, there aren’t a lot of short cuts — in spite of the pitches you may see from companies offering “credit repair.” While a legitimate financial advisor or credit counselor can help you get your finances back in shape and — over time — rebuild damaged credit, the “credit repair” business is riddled with scammers.

You’ll hear from folks who promise to raise your score — for a big fee — or give you your money back. When you read the fine print, you find you don’t get it all back (if you get any of it). Many of these companies count on finding inaccuracies in your report, which you can do yourself for free. For more on credit repair scams, check out the FTC’s Web site.

Ultimately, the only way to build a credit history is to take on a manageable level of credit, pay it off on time and before long your score will come up. But it takes time.

That’s why they call it a credit “history.”

Also in msnbc.com business Interactive: Ten cars that Detroit will regret Local governments face hard budget choices One casualty of the recession: U.S. mobility ConsumerMan: HELP for homeowners   Video: ‘Cash for Clunkers’ might be a win-win

MORE FROM ANSWER DESK

Answer Desk Section Front

Who'll take California IOUs? Slow stimulus spending Raiding college savings There’s a reason GM stock is cheap Housing rebound may be slow Beware the hidden agendas of 'experts' Meltdown will leave vastly changed economy Yikes! Series I Savings Bonds paying 0.0% Who's going to fix my Pontiac? Bailouts and banks’ bottom lines Answer Desk Section Front   Add Answer Desk headlines to your news reader: