Help! I’m a college student in debt!

• Do they provide educational classes or workshops?
  
  
• Does the agency work with all of your creditors (some only work with those who agree to pay them)?
  
  
• Is there a minimum amount of debt required? There shouldn't be.
  
  
• What are the options? If a debt management plan is the only one, keep looking. Each situation is different, and the solution they come up with for you should be customized.
  
  
• An initial session length of an hour is standard; any less and you should be concerned that they have an adequate idea of your situation.
  
  
• Will the full amount of your payment go to creditors? It should, not into the agency's pocket.
  
  
• Ask for written evidence that the agency is bonded and insured.
  
  
• Check with the BBB and the state attorney general's office to see if there are any unresolved complaints about the company.

Q: My wife and I are looking to buy our first house and improve our credit scores. Her credit is worse than mine, and she has several defaulted credit cards that have gone to collection agencies. My credit is somewhat higher and my score is only low because of the amount of outstanding balances. Would it be better to focus on paying down the bills in my name first to improve my score or work on her defaulted credit cards? — Gene, Myrtle Beach, S.C.

A: First, and it sounds like you've done this already, but make sure you have recent copies of your credit reports. Then think about the size house you want to buy and whether you can qualify it based on your income alone. If you can, then focus on your credit. That means making sure your outstanding debt on your credit cards represents no more than one-third of the credit you have available to you. You can do that by paying down your debts or (rather sneakily) by asking your current credit card companies if they can increase your limits without pulling your credit report. Many companies will do this for good customers and a few thousand dollars in your credit line can pop your credit score.

If you need both incomes to qualify — and most people do — then look at your wife's report simultaneously. If your wife's defaults are near the seven-year mark, they will soon rotate off her credit report. So that negative won't show any more and if she's been more responsible with her debt since, her score may come up and be higher than you think. If that's too far away, she should pay those bills either in full (if she can) or through settlement. Regardless of how she pays, since it was a default it will still reflect on her credit report until that seven-year period is up. But a paid default is more favorable than an outstanding one. And in the meantime, she should keep clean by paying her bills on time and not running up any new debts or shopping for cards.

If you both are going to be applicants on the mortgage loan, you want to work to get both scores into a good place — over 700 — before you apply. A high score on your part might slightly offset her low one, but all in all, they'll obviously benefit more if both scores are high. I know the temptation is to buy the house now, but you'll be saddled with a high interest rate. Wait another year or two and you could get a much lower one.

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Jean Chatzky is an editor-at-large at Money Magazine and serves as AOL’s official Money Coach. She is the personal finance editor for NBC’s TODAY Show and is also a columnist for Life Magazine. She is the author of four books, including 2004’s “Pay it Down! From Debt to Wealth on $10 a Day” (Portfolio). To find out more, visit her Web site, www.jeanchatzky.com.

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