BY MICHELLE SINGLETARY
THE WASHINGTON POST

WASHINGTON - The following is from one of Michelle Singletary's online discussions.

Q. I had lots of bad debt that is now paid off. But I still can't get credit. My FICO score is 520. I know I'm going to need a new car. Where do I go from here?

A. You may try getting what is called a secured credit card. Go to bankrate.com and type in secured credit cards. With this type of card, you put money into a savings account that you can charge against. Then buy only low-priced items and pay the bill off and on time every month. That can help you regain good credit.

As for getting a car, wait until you build your credit, or you will pay a steep interest rate.

Q. My husband and I are expecting our first child. He works. I'm staying home. He wants to use our tax refund to pay off our credit card. It will pay off most of it, but not all of it. I'm concerned that with one salary, we should just put it in savings. Your suggestions would be appreciated!

A. Do both. With one salary, it's critical that you have money in your savings (three to six months of living expenses). But it's also important to get rid of that credit card debt. So take some of the refund and put it in savings if you don't have any savings. Now if you do have some savings, pay off the credit card debt.

Q. I am a single mother who lives in a home that is being purchased by the city for urban renewal. The city is offering $60,000. Can you give me some guidelines as to how to manage this sum? I want to furnish my house and pay off my car and just have the mortgage and house bills to pay for. Good idea?

A. From your note, you will be able to get another house. If so, I would use the rest to pay off the car, but I would also build up my savings if I didn't have any, instead of buying furnishings.

Q. I am only about halfway through my vehicle lease and setting aside money for the next step. Now, assuming everything looks good (no penalties) - what would you advise to do at the end? Buy it outright if I can get less than they say it's worth? Buy it outright if it's reliable and a good value to me? Start with another car, and only do real financing?

A. Let this be a lesson to everyone else out there. Leasing is bad. In your case, once the lease is over, buy a low-priced, reliable used car. If you can afford the car you are leasing now, then look into it. (It will be in good shape and have low mileage, right?) But compare it with other used cars of the same make and model at a different dealership (or private owner). If your current lease offers the better deal, buy the car you are leasing now.

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