Can posting bail hurt your credit?
Bad news: Your teen got into a jam with the law. Will bailing him out of jail mean bad news for your finances, too?
It's spring, and that means spring break, graduation season and perhaps a bit of reckless behavior parents hadn't expected. If you get a 2 a.m. phone call -- the good news that your kid is not in the hospital, the bad news that he needs bail money -- what's a sleepy, startled parent to do?
If the crime is serious, you may have to wait for a judge to set bail at a hearing. For less serious infractions, there are standard amounts of bail, depending on the charge. Sometimes, a suspect will be released on his or her own recognizance. That will cost you nothing other than the rest of the night lost to picking up your child and worrying about what's next.
Other times, the bail could be relatively low, say, $10,000 or $25,000. That's still a lot of money. But if you want to and you are able, you can pay the full amount and it will be refunded when your child appears in court as scheduled.
Most people borrow the money. And chances are, "What's this going to do to my credit?" is low on the list of things stunned parents are worrying about. The good news is that's probably OK, because any effects would be indirect.
Now, let's say you can't easily write a check for the amount of bail, nor is your credit limit high enough to put it on a credit card (assuming they permit payments by credit card). Your next stop is a bail bond agency. There will be one or more near the jail. In general, they will post bail for you, for a fee of about 10% of the bail amount. (So a $10,000 bail would cost you $1,000.) Most likely, you can put that amount on your credit card. The bad news: It will be treated like a credit card cash advance, according to TheStreet, and those can be very expensive. (In general, you'll pay a 3% fee, and interest -- higher than your normal credit card interest -- begins accruing immediately, with no grace period.)
Krystine Snyder, director of public relations for Experian, said the only way she could think of an arrest or bail payment getting on a credit report would be if a person failed to repay a debt to a bonding agency, and the debt went to collections. "The entry on the report might say 'Bob's Bail Bonds Collection Agency,'" she said, adding that she'd never heard of that. Otherwise, your credit report would yield no clue to any arrest records or bail.
Your credit score could be affected if you paid the bail or bail bond agency's fee with a credit card and it raised your balance and credit utilization enough to affect your score. Finally, if you took out a personal installment loan to pay, your credit score could be affected (up or down -- there would be an initial slight drop from a hard inquiry, but if the new loan gave you more kinds of credit, it might actually improve your score). If you want to see where your credit currently stands, you can check two of your scores every month on Credit.com.
When you bail your kid out of jail, even if you use a bonding agency, you are guaranteeing that he or she will show up in court. If they don't, you are obligated to help locate them and get them to court. If you're not able to do that, you'll be responsible for the entire bail amount.
The best idea? An "I know you'd never do this, but in case some of your friends get tempted..." talk. Because a kid would have to work a lot of hours to repay the bail bond fees. And parents would rather spend that money almost any other way.
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