Master Your Money - Page 5 of 6

Master Your Money

“People really need to do their homework, because different companies do buybacks for different reasons,” says Evans-Motte. “And a lot of companies bought back stock in 2006 but now wish they had waited, because prices are now a fraction of what they paid.”

Can an unpaid traffic ticket hurt my credit rating?
Potentially, yes. Historically, the odds would’ve been very much against it. Because it’s not a simple thing to report information to the major credit bureaus–Equifax, Experian, or TransUnion–a town that nabbed you for speeding or parking violations likely couldn’t be bothered to pass that data long. But these days, municipalities are cash-strapped, and sometimes they’re bringing in outside collection agencies to collect money owed them. For their part, “collection agencies usually report to credit bureaus the accounts on which they’re trying to collect,” says Craig Watts, a spokesman for Fair Isaac. Or if municipal or state agencies end up slapping you with a lien because you keep racking up pricey tickets, that could come back to bite you as well. So while it may not be listed on your credit report as a traffic issue, the information could get on your record as a debt for which you’re not paying up. And that could drive up your borrowing costs for mortgage, auto, and other loans. So to be safe, pay the $50 or $75 now to avoid potentially paying tens of thousands of dollars later.

While it may not be listed on your credit report as a traffic issue, the information could get on your record as a debt for which you’re not paying up.

Am I responsible for my parents’ debt when they die?
It depends on your relationship to the debt. If the bills are theirs and theirs alone, then no, children are not responsible for repayment. That holds true for medical bills, which is such a terrifying issue for the “sandwich generation” of middle-age folks who are caring for both their elderly parents and their young children at the same time.

But if you’ve co-signed for something–whether it’s a car loan or a credit card–then you’re on the hook for the full amount. The moral of the story: Don’t co-sign for anything, ever, no matter how close you are to the borrower–unless you can afford to come up with all the cash without breaking a sweat. “I’ve seen and heard so many horror stories,” says certified financial planner Alvin Rogers. “When you co-sign, what you’re essentially saying is, ‘I’m responsible for this debt.’ So only do it, for a big item like a car, if you were already going to buy it outright for them anyway.”

How can I help my child establish credit?
Authorized user accounts, also known as “piggyback credit,” were once commonly used by parents to help their children build a credit history. The practice became so prevalent that credit-repair services were basically selling solid credit histories to any applicant. As a result, Fair Isaac Corp., which developed the FICO credit scoring system, has altered the way it crunches