Your Top 11 Credit Questions Answered

If you are asking about the ideal number of credit cards to obtain a strong credit score, two is a good number as well, though you can have many more and still maintain a strong credit rating. Generally, it's a good idea to have at least four credit accounts of different types (for example, a mortgage, car loan, a major credit card and a retail card). Keep your credit cards active by using them periodically. It's good to pay your bill in full each month to avoid finance charges.

Finally, if you have a lot of credit cards already, don't close them in the hopes that it will boost your credit score. Your score may actually drop if you close old accounts.

4. My child has a lot of debt. What is the best way to help?

The best way to help your child is to give him or her some financial literacy materials to learn about how to manage debt.

But my guess is that you may be writing because he or she is asking you for a consolidation loan to help pay off the debt and, while you want to be helpful, you are not sure that's the route to go.

First, trust your instincts. If you think your child has trouble handling money, then it is likely you will just be enabling him or her to go a bit longer without having to shape up. Even if your child is truly in deep straits, your loan is unlikely to solve the problem. He or she needs crisis intervention, not a loan.

If you simply can't say no, then do one of two things:

  • Give a gift rather than a loan. You'll never have to worry about whether you will get paid back and there will be no hard feelings if you aren't.
  • Agree to lend the money only if your child will agree to sign an official loan agreement. It would also be a good idea to have them set up automatic transfer of the payments ┬áto your checking or savings account from your child's. There will be no wondering about whether a check has been mailed.
  • 5. My spouse/parent died and I discovered a lot of debt. Do I have to pay it?

    In most cases you are not responsible for another person's debt when they die, unless you are a co-signer on the account. If, however, that person was your spouse and you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), debts incurred during the marriage are considered community property and you are likely responsible for them.

    When a person dies with outstanding debt, the creditor will first look to any co-signers and then to the estate for payment. The creditor may not bother to pursue the debt if it is a small amount, but there is no guarantee.

    If you are feeling pressured to pay a debt you are not responsible for, or if you are not sure whether you have to pay your deceased relative's debt, you may want to contact an estate planning or consumer law attorney.

    [Related Article: The First Thing You Must Do Before Paying Off Debt]

    6. I am retired and Social Security is my only income (or I am on disability and have no income except Social Security Disability). That barely even covers my monthly rent, utilities, medicines, medical co-pays, food, etc. I am being hounded for credit card debts and the debt collectors are calling day and night. I don't have the money to file for bankruptcy. What can I do?

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