How inquiries may affect your credit

Q: Problems with identity theft have lots of people interested in getting copies of their credit reports. Are requests for copies reflected as "inquiries to obtain credit"? Can you remove inquiries?

L.M., Wakefield, Mass.

A: Requests to see copies of your own credit report are noted, "but have no impact [on your ability to obtain credit] because they are not shown to creditors," says Rod Griffin, an official of credit-reporting firm Experian, in Orange, Calif.

Inquires to obtain credit, such as a new credit card, stay on your report about two years and cannot be removed. But credit reports do not indicate whether such requests were approved or denied, says Mr. Griffin. For more information, go to www.experian.com and look for "credit advice."

Q: I have government bonds that mature this month, and need to reinvest them into something that gives me a good income. My Social Security is very modest. Can you suggest an investment or type of fund that is safe and will provide a good yield? I have about $50,000 to invest.

M.H., Long Island City, N.Y.

A: "Consider investing in no-load or low-load short-term to intermediate-term bonds funds," says Pat Schipper, a financial planning associate with Prism Financial Group, in Overland Park, Kan.

Such corporate bond funds tend to offer yields one to two points higher than government bonds. Look for funds with top-quality bonds and short periods of duration, since that reduces risk, Mr. Schipper says.

Finally, she suggests you talk to a financial planner to help you maximize your savings and investments.

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Q: When interest rates are low, bond prices tend to be high. Can I therefore assume that share prices of bond mutual funds are up right now? Are bond-fund share prices related to the prices of the bonds included in the fund's portfolio, or to the interest these bonds yield?

T.M., via e-mail

A: Your premise is correct, says Scott Berry, a mutual-fund bond expert with Morningstar Inc. in Chicago. "Shares of bond funds have been up the past two years, as interest rates have come down."

The price of individual bonds within a fund portfolio are determined by two main factors, Mr. Berry says: the credit quality of the offering and the bond's interest rate.

"The share price of the bond fund is determined by the [average] price of all the bonds in the fund portfolio," he says.

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