What would you do if a friend or relative asked you to cosign a loan? Before you give your answer, make sure you understand what cosigning involves.

The Fair Credit Billing Act defines a billing error as any charge for something you did not buy or for something bought by a person not authorized to use your account. Also included among billing errors is any charge that is not properly identified on your bill, that is for an amount different from the actual purchase price, or that was entered on a date different from the purchase date. A billing error may also be a charge for something that you did not accept on delivery or that was not delivered according to agreement. Finally, billing errors include errors in arithmetic; failure to reflect a payment or other credit to your account; failure to mail the statement to your current address, provided you notified the creditor of an address change at least 20 days before the end of the billing period, and questionable items or items on which you need additional information.

The best way to maintain your credit standing is to repay your debts on time. But there may still be complications. To protect your credit and to save your time, your money and your future credit rating, you should learn how to correct the mistakes and misunderstandings that may tangle your credit accounts. If there is a snag, first try to deal directly with the creditor. The credit laws can help you settle your complaints.

Your credit bureau file contains your name, address, social security number, and your birth date. It may include information about your past and current employers, positions and incomes and whether you own or rent your home. Your credit file may also contain detailed credit information.

Credit bureaus are private, for-profit businesses. At the center of the credit reporting system are three national credit bureaus — Equifax, Experian, and Trans-Union — along with about 1,500 local and regional bureaus.

If you apply for a charge card, credit card, car loan, personal loan, or mortgage, your credit experience — or lack of it — will be a major factor considered by the creditor. Your credit experience may even affect your ability to get a job or buy life insurance. A good credit rating is a valuable asset that should be nurtured and protected. If you want a good rating, you must use credit with discretion; limit your borrowing to your capacity to repay, and live up to the terms of your contracts. The quality of your credit rating is entirely up to you.

Although it is difficult to precisely measure your credit capacity, there are certain rules of thumb that you can follow. Experts suggest that you spend no more than 20 percent of your net (after-tax) income on credit purchases. Thus, if your take-home pay is $2,000 a month, you should spend no more than $400 a month for consumer debt payments. Do not include payments on mortgages or home equity loans.

When you are ready to apply for credit, you should know what creditors think is important in deciding whether you are creditworthy. You should also know what they cannot legally consider in their decisions. The Equal Credit Opportunity Act (ECOA) starts all credit applicants off on the same footing. It states that race, color, age, sex, marital status, and certain other factors may not be used to discriminate against you in any part of a credit dealing.

The best way to determine how much credit you can assume is to first make an accurate and sensible personal or family budget. Budgets are simple, carefully considered outlines of plans to distribute dollars of earnings.

Some lenders charge lower interest but add high fees; others do the reverse. The Annual Percentage Rate (APR) allows you to compare loans on equal terms. It combines the fees with a year of interest charges to give you the true annual interest rate. All lenders are required under the Consumer Credit Protection Act to disclose the effective annual percentage rate as well as the total finance charge in dollars. The APR is the true measure of the effective cost of credit. It is the ratio of the total finance charge, not just the interest charge, to the average amount of credit in use during the life of the loan and is expressed as a percentage rate per year. The calculation of the APR depends on whether the loan is repaid in a single payment or in installments.

When deciding whether or not to pay off your loan early, you should know the amount of interest you'll save prior to prepayment, because you may be better off investing the funds elsewhere rather than prepaying the loan.

The cost of credit increased with the passage of the Tax Reform Act of 1986, because since that time the interest paid on your auto, credit cards, education and other consumer loans is no longer deductible on your tax return.

Depending on your financial situation, and how you use credit cards, some of the following tips may save you money:

The length of time that the loan is considered outstanding, and thus the length of time over which interest is due, is an important factor is computing the amount of interest, especially on credit card debt. Lenders use one of four basic methods to determine the amount of time for calculating interest.

The two most common methods of calculating the interest portion of the finance charge use the simple interest and the compound interest formulas

We all have short- or long-term needs for money or credit. It could be a fender-bender with your car, an accident or an illness; unexpected incidents can create a need for several hundred or several thousand dollars. Credit can be obtained from a wide variety of sources.

"Credit" is an arrangement to receive cash, goods, or services now and pay for them in the future. Consumer credit refers to the use of credit for personal needs by individuals and families as contrasted to credit used for business or agricultural purposes.

Using credit to purchase goods and services may allow consumers to be more efficient, more productive or to lead more satisfying lives. There are many valid reasons for using credit. Although using credit increases the amount of money that you can spend on goods and services today, it decreases the amount of money that you will have available to spend later. Since most people expect their income to rise, they expect, not only to be able to make payment on past credit purchases, but also to make new purchases.

The cost of your credit card is spelled out in your agreement and in the terms and conditions on the back of your monthly statement. Most people don't bother with the fine print, but if they did, here's what they would find. There's more to the cost of a credit card than the annual fee and the interest rate on your unpaid balances. Equally important are the grace period— the time between your purchase and when you have to pay to avoid finance charges — and how the interest is actually computed.

The finance charge is the total dollar amount you pay to use credit. It includes not only the interest costs, but also includes other costs, such as service charges, appraisal fees, points, late fees, minimum balance fees or credit-related insurance premiums. Be careful to ask about all fees — they add up very quickly and can substantially increase the cost of the loan. It is important to consider the finance charge in making any intelligent credit decision.

Consumer credit falls into two broad categories: closed-end and open-end.

Just as you may be put out of business by a large legal judgment against you if you don't have adequate liability coverage, the same thing could happen because of a prolonged hospital stay or medical treatment if you lack sufficient health insurance coverage.

Although this discussion mainly focuses on credit as it affects your personal finances, because as a business owner your personal and business financial situations are closely intertwined, your personal and business credit standing and management are also closely related. If your business gets into trouble by incurring too much debt, this will likely affect the business's profitability, which will in turn likely affect your ability to qualify for personal credit.

Long-term health care contracts are relatively new arrangements designed to provide insurance that will meet your health care needs should you become chronically ill or disabled after reaching a specified age, such as 50. As is apparent from their name, long-term care policies greatly expand the time period over which benefits will be paid out, when compared to standard accident and health policies. Another advantage is that, unlike Medicare coverage, long-term care contracts will cover the cost of custodial care, as well as skilled nursing care. These two advantages often make long-term care contracts a preferred way of pre-funding nursing home care for the elderly.

An annuity is sometimes referred to as an "upside-down life insurance policy." With a life insurance policy, you normally pay a relatively small periodic amount in the present to get a large sum in the future. With an annuity, you normally pay a larger amount now in order to get periodic payments (starting immediately or at some point in the future) over an extended period of time. While a life insurance policy primarily protects your dependents against the economic harm of premature death, an annuity is meant to protect you (and your dependents, or children, if you live long enough!) from the economic harm of outliving your life savings and other resources.