OOh, Another question:

[ccsauer]

Hey, ok, I was debating asking this question, but:

My credit is on track, I'll be paying my revolvings down to nearly zero within the next 6 months or so. My scores are reaching the mid 700's. Just got a house, my car payments have always been on time and after paying down the cc's, I'll be paying extra on those. My wife has a steady job (teacher), I have a steady job as far as I know (engineer) and we have a good amount of income coming in.

My sister, back in the day when my credit was not too hot (3 years ago, approximately), let me buy a Dell under her name, using her stellar credit at the time. It was 0%, and I paid it off quickly, over 4-5 months.

Times have changed, my sister went back to school for her masters, her credit is taking a huge hit, and the cc companies are not being too kind to her. Her util is high, her score is acceptable, but the companies keep raising her APR.

If you don't see where this is going....I'd like to repay her for her previous help.

Besides the obvious utilization issues, and the trust issue with making sure she pays it off... what is the downside to looking into a 15-month 0% card to transfer her balances over to, while she takes out a larger student loan than needed to pay down some of her other balances, and accepting a constant payment that, according to her calculations, she can pay off the amount completely within 2 years.

I know it's a risk, but it's also family.

Oh, second point, she's going o be living with us, sionce we bought a house to expand into in the future, but currently, it's too big for us anyway. This helps her with monthlies (she's paying us a small amount for rent), and helps us pay down the 2nd mortgage more quickly.

Let me know what you guys think is the best action. CC? Personal loan? etc etc

[Anonymous]

It is wonderful that you and your sister have taken care of each other at difficult times. In my opinion, I would go for a personal loan. FICO does not look to kindly on high revolving debt. Even if you do pay it down in 2 years. Credit Cards get the most favorable scoring at 1-9% Utilization and anything over 35% Utilization kills your score.

In addition, adding your sister as an authorized user will not help her scores anymore as the rules of the game will be changing. She will not longer have the benefit of solid payment history and credit limits of the authorized user account with 1 CRA this year and the other 2 following suit next year.

You may want to co-sign a personal loan for your sister and pay off all the debt that way. In this manner your total revolving debt score on FICO will not suffer. And your sister will have the benefit of establishing a healthy tradeline on her reports.

Since she will be living with you, this won't be so dangerous to your credit so because you will be able to keep an eye on her and make sure the payments are being made. I would have her give the payments to you 10 days before they are due and have you pay them directly. This ensures that the account stays in good standing and your credit will not suffer for lack of payment/late payments etc.

Welcome to the boards and good luck.

Cecilia

[ccsauer]

Hmmm, well, that's awesome, but how does one go about getting a "personal loan"? Where would I go, what do they look at, how do her scores vs my scores vs incomes vs her being a student vs all of that come into play? How large of a loan could she apply for? Is it slated in for a payback period? What APRs should I be shooting for?

Thanks in advance!

[Anonymous]

I think your original plan is a good one...As long as you can get a card(s) with a CL large enough to keep the balances below 30-35% This way the score wont suffer much.  You can also hold the cards she currently has and have her agree to move the balance back  after her 2yrs date or sooner.

[ccsauer]

hmm, that's a good idea, actually. The personal loan business scares me a little, risk-wise, 'cause something could always go wrong. Sadly, that's the beauty of CCs.

Well, I'll see if I can get util down to 35% or so with a new card and we'll see what happens.

Thanks for all the help! and if anyone else has a comment or an idea or whatever, feel free to contribute!