Thoughts?

[Harvey26]

So as you guys know I recently purchased a 2017 Nissan Altima SR. at 4.77%. But me and mom were thinking what if we add her as a co-signer to my loan. Her scores are 750 or better depending on the CR. Also when we pulled them from creditchecktoal it says that lack of installment loans is hurting her credit do you think by adding her it would get her too that 800 mark across the board?

[Anonymous]

I am not sure you can add a co-signer to the loan at this point and would instead have to refinance with her name. I think it would be easier for her to join Alliant, or any other credit union, that offers secured personal loans. She could take out a $500 secured loan and pay on it for a year to help with that "lacking installment" issue.

I think that would help her score improve as long as no new accounts, low debt to credit ratios and no late payments are also realized. 

Keep in mind too that once you get to a higher credit score, FICO seems to grasp at straws to let you know why you do not have a perfect 850 score. For instance, now she may get the "lack of recent installment information" but the minute she gets an installment loan she will get the "balance on installment loan too high compared to original amount" and probably "length of time since newest account opened too recent." Those are not the exact words but close enough. Kind of like darned if you do, darned if you don't. In the long run, an installment will benefit her profile. 

[DeeBee78]

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@Anonymous wrote:

Keep in mind too that once you get to a higher credit score, FICO seems to grasp at straws to let you know why you do not have a perfect 850 score. For instance, now she may get the "lack of recent installment information" but the minute she gets an installment loan she will get the "balance on installment loan too high compared to original amount" and probably "length of time since newest account opened too recent." Those are not the exact words but close enough. Kind of like darned if you do, darned if you don't. In the long run, an installment will benefit her profile. 

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This is the situation my partner is in right now. Has an 835 EX FICO 08 score, and the factors for his score are not true at all-  Length of time accounts have been established, balance to limit ratio too high... Even with a perfect 850, they're going to have to put something as a negative factor. FICO scoring models reward debt. 

[Anonymous]

At 750 shes top tiered regarless of installment debt so she should getbyouba better rate if you refi with her as cosigner. Then she will benefit from the loan since it is installment loan.

[Anonymous]

With her current scores there isn't much benefit to taking on debt simply for the purpose of adding points to an already excellent FICO score.  Having said that if she wanted to lower your interest rate and didn't mind having that payment report against her DTI I am pretty sure she would gain some points.  One side effect could be the impact on her car insurance.  I paid cash for my kids cars so I wouldnt have to co-sign and have them on my insurance.  I am not entirely sure if this is an issue for all insurers but my insurer (USAA) views any cars with my name attached to the title as being required to be under my policy.  As soon as my 17 year old turns 18 I will sign over her car to her and put her on her own policy.  This saved me about 200 bucks a month going this route with my oldest, because her policy was much cheaper not having a sports car and high liability coverages.  I think I will save about the same with my youngest.  Anyway, something to consider