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Keeping your credit history

Save what you can: a basic tenet of good personal finance

Dear Dave,

I recently tried to cancel a credit card, and the customer service representative told me that doing this would cancel out my entire 14-year credit history. Is this true?

— Keri

Dear Keri,

No, it is not true. The rep you spoke with is either a moron or a liar.

Cancelling a credit card doesn’t erase a person’s entire credit history, and it doesn’t erase their credit history with that company or their card, either. And by the way, your credit history doesn’t last 14 years. It lasts seven years, but all the information on your record that is older than that — except for Chapter 7 bankruptcy — comes off your credit bureau report. A Chapter 7 filing stays on your report for ten years.

So, you don’t have a 14-year credit history. Sorry, it’s just not there. And if you talk to this company again, you really need to find an educated rep to speak with. This one doesn’t have a clue!

— Dave


Dear Dave,

With all the economic problems today, what can college students do to avoid money problems in the future?

— Eric

Dear Eric,

There are always three or four things smart things you can do to protect yourself financially. One is to live on a budget. When you give every dollar you make a name, and write in down on paper, it helps you know what your money is doing instead of wondering where it went.

Two more good ideas are staying out of debt, and saving as much money as possible. Your money is your biggest wealth-building tool, and when you’re saddled with debt, your money goes to creditors instead of into your pocket. Saving money is what prepares you for the good and bad things life throws at you — whether it’s putting money aside to buy a car, a house or handling unexpected things that always happen.

Another thing is investing. I know you’re young, but a little bit invested now could make you a millionaire when you’re ready to retire. These are all simple things, Eric. But they’ll make a huge difference in your financial situation now and in the years to come!

— Dave

Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books. The Dave Ramsey Show is heard by more than 8.5 million listeners each week on more than 550 radio stations. Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.