topic Re: Question about co-signing. in General Credit Topics

Question about co-signing.

bobkmn — Sat, 15 Mar 2014 21:03:18 GMT

I am working hard to improve my credit score and it is currently 700+. My question is this, my son has asked me to co-sign for a new vehicle for his fiance. She just went through a divorce and her ex screwed things up and messed up her credit. The problem has allegedly been fixed, but her credit is still low. I know that they can make the payments so I am not concerned about that--I am just wondering if my co-signing will negatively affect my FICO score by adding additonal liabilities to my finances?

Thanks for any help I can get.

Re: Question about co-signing.

Anonymous — Sat, 15 Mar 2014 21:09:50 GMT

The TL will report to your CR, so, you will probably see some point loss when it reports. How much is a YMMV thing.

It would not impact your revolving utilization.

It will also affect your AAoA by adding a new TL. How long ago is your newest account?

Re: Question about co-signing.

bobkmn — Sat, 15 Mar 2014 21:17:30 GMT

Pardon me but being new I am not up to speed on some of the abbreviations here. What does this mean:

@Anonymous wrote:

It will also affect your AAoA by adding a new TL. How long ago is your newest account?

My newest account is over a year old, but I am about to apply for a new one in order to consolidate my balances with 0% APR for 15 months.

Thanks!

Re: Question about co-signing.

Gunnar419 — Sat, 15 Mar 2014 21:25:37 GMT

@bobkmn wrote:
I am working hard to improve my credit score and it is currently 700+. My question is this, my son has asked me to co-sign for a new vehicle for his fiance. She just went through a divorce and her ex screwed things up and messed up her credit. The problem has allegedly been fixed, but her credit is still low. I know that they can make the payments so I am not concerned about that--I am just wondering if my co-signing will negatively affect my FICO score by adding additonal liabilities to my finances?

Thanks for any help I can get.

No matter what it does or doesn't do to your score in the short term, the tales of people who've been burned by co-signing are many and heartbreaking. You know your son's fiancee CAN make the payments. But WILL she? What if they break up and she decides to get back at him by burning you? What if she loses her job? What if she gets sick? What if, what if? If she quits paying for ANY reason, you get stuck with all the lates, with the repo, with the responsibility for paying any shortfall after the vehicle is auctioned off. Nightmare City.

I also don't trust the phrase "The problem has allegedly been fixed, but her credit is still low." If the problem has really been fixed, then why is her credit low? Why is your son asking YOU to co-sign, rather than doing it himself?

Sorry, I hate to sound like a grouch, but I've seen too many people whose good credit has been destroyed by co-signing. Unless you have some really, really strong reason to do this, and unless you have solid knowledge that the fiancee's finances and character are both golden, I wouldn't touch this situation.

Re: Question about co-signing.

09Lexie — Sat, 15 Mar 2014 21:54:20 GMT

@bobkmn wrote:
Pardon me but being new I am not up to speed on some of the abbreviations here. What does this mean:
@Anonymous wrote:

It will also affect your AAoA by adding a new TL. How long ago is your newest account?
My newest account is over a year old, but I am about to apply for a new one in order to consolidate my balances with 0% APR for 15 months.
Thanks!

AAOA = Avg Age of Accounts

Re: Question about co-signing.

Anonymous — Sun, 16 Mar 2014 01:13:22 GMT

As Lexie said Average Age of Accounts. For every new account added it will have an impact on your AAoA and possibly your score.

Re: Question about co-signing.

RobertEG — Sun, 16 Mar 2014 01:29:36 GMT

I share the concerns about co-signing, as if any problems arise, any derogs will also be reported to your CR, and the creditor/debt collector will go after both parties.

Even a couple of months of hard times for them might tank your score.

If your son's credit history is also such that they wont approve with him as a co-signor, that would raise serious concerns for me.

An alternative might be to take out a personal loan or LOC/HLOC in your name, and lend it to her to increase her down payment, and thus chances of approval for her own loan, possibly with your son as a co-signor.

Interest money out of your pocket, but it would keep your assistance separate.....

Re: Question about co-signing.

Anonymous — Sun, 16 Mar 2014 03:21:21 GMT

Just want to add frorm my experience. I wanted to be "the nice guy" and help someone out. Didn't completely understand what I was doing when I cosigned, but I did not anticipate that the person I was helping would give me a big "screw you" one day. The car repo'd a year ago. My credit score tanked, though a year later it is respectable, but I think that is because of a very long and solid credit history and score a good bit north of 800.

The worst part is how the bank had no sympathy and no interest in working with me. I offered to track down the person (they didn't even have correct address/phone number/email address), attempt to gain possession of the car, and get it current. I found the person, and while working out how to meet (they had moved away), the bank sent out the repo people. Didn't care that I was trying to work things out. Its no fun getting denied for credit or resorting to virtual begging after 25 years of solid credit. I don't get called "sir, yes sir" these days.

Just something to think about.

Re: Question about co-signing.

Anonymous — Sun, 16 Mar 2014 02:54:56 GMT

I agree about being very careful in considering co-signing.

I did it for a family member and they stopped making payments and the vehicle was repoed. It was me they came after.

Re: Question about co-signing.

Anonymous — Sun, 16 Mar 2014 04:36:19 GMT

Be careful with co-signing. I did it for a family member and the car was repo and I ended up paying after the repo and it is still now on my credit report. I have done everything possible to get it removed.

Re: Question about co-signing.

NikoD — Sun, 16 Mar 2014 15:30:31 GMT

I just thought I'd add my 2 cents even though everyone else has it covered. Don't do it, don't do it, don't do it! I'm sorry but I feel she can drive around in an old crappy car she pays cash for until either she or your son is able to get a loan on a better car. I have excellent credit but I'm perfectly happy driving around in my old reliable 15+ year old Toyota. I don't know the specifics of her situation but I wonder why she needs this new car right now. If you do decide to co-sign anyway, I would suggest you make arrangements for you to be able to verify that the payment is made each month and be willing and able to make the payments yourself if she flakes out and doesn't pay. Even if you know your son's fiance really well I'd still be very cautious.

Re: Question about co-signing.

bobkmn — Sun, 16 Mar 2014 15:40:59 GMT

Thanks to all of you who responded to my question. Although I am sure that you had my best interest at heart, I am not the least bit concerned about my son and his future bride defaulting on the loan. He is 40 and has had a good job includiing promotions for about 15 years and his fiance is around the same age and has a good job as a mechanical engineer with a global company. She is being promoted and transfered to another position. And, in December 2012 my wife and I co-signed for a $1200/mo annual lease for him. He fulfilled the terms of the lease and they allowed him to renew w/o a co-signer.

I was really only concerned about the impact of my co-signing on an application for a credit card--namely the Discover it or the Citi Simplicity cards. I have received 'pre-approval letters from both. Perhaps I can just apply before I co-sign. A bit off topic, but does anybody have a choice between these 2 cards? If it matters, my FICO score is 708.

Thank you again.

Re: Question about co-signing.

NikoD — Sun, 16 Mar 2014 16:06:50 GMT

Ok, I understand better now why you are willing to trust her. I was thinking more along the lines of a couple of 20 something kids with unstable employment. BTW both of those cards are listed in the myFico credit card center as being for people with excellent 720+ credit. I can't give you advise on which one to go for (maybe someone with a Fico of less than 720 who got one of those cards could chime in) but I think you should apply before your scores take a hit with a brand new loan.

Re: Question about co-signing.

bobkmn — Sun, 16 Mar 2014 16:54:31 GMT

Thanks for your note and your better understanding of their situation. I already have had folks on here tell me that they got CLs way above what I am looking

for with FICO scores around 670-690. They are over in the Credit Card section of the forum if you want to read them and then let me know what you think,

I am very impressed with the amount of help and good information I am getting here. :-)

Re: Question about co-signing.

NikoD — Sun, 16 Mar 2014 17:30:53 GMT

I'm pretty new around here and would't want to stear you in the wrong direction. I have read about people with short credit histories getting a Discover but I can't really say if that is the way to go in your case. If you haven't already, maybe you should ask over in the credi card area about which card you should go for. I'm sure they will want more info on your situation though (e.g. length of credit history, bankruptcy, etc) to give you the best advice. Good luck.

Re: Question about co-signing.

bobkmn — Sun, 16 Mar 2014 18:30:46 GMT

Thanks. Not really sure you understand my situation. I do not have a short credit history.

i am 67 years old and have had cards most of my life. Had a few bumps a few years ago and am rebuilding. My FICO is 708 and I am just trying to find the best card to apply for to transfer balances from 2 unsecured cards. Thanks for your thoughts.

Re: Question about co-signing.

NikoD — Sun, 16 Mar 2014 19:10:57 GMT

Yes, I figured you must be in your 60's to have a kid around 40. I just did't know what your situation is because some people just use debit cards so they have no history with revolving credit. You also mentioned working on improving your credit so I wasn't sure if that meant some late payments or if there was not much in your file.

One of my old, closed CC should still be reporting (it was only closed about 5 or so years ago) but it is not on my credit reports. It would help my average age of accounts if it was still there because it was opened around 1999 or 2000 but I can't get it reported because Cap1 can't even find a record of the account in their system. Even if you've had credit in the past it doesn't mean it will show up now and after accounts have been closed for 10 years they vanish anyway. Details like the age of your oldest account and the average age of all your accounts may help in deciding which CC would be most likely to approve you.

Re: Question about co-signing.

Anonymous — Sun, 16 Mar 2014 19:55:46 GMT

@bobkmn wrote:
Thanks. Not really sure you understand my situation. I do not have a short credit history.
i am 67 years old and have had cards most of my life. Had a few bumps a few years ago and am rebuilding. My FICO is 708 and I am just trying to find the best card to apply for to transfer balances from 2 unsecured cards. Thanks for your thoughts.

I would suggest starting a thread in the CC board about what you are looking for. They will be more than glad to help and all are very knowledgable.

Re: Question about co-signing.

bobkmn — Sun, 16 Mar 2014 20:15:00 GMT

Yes, I had not planned to have this discussion here.

Thanks!

Re: Question about co-signing.

mrgoattoo — Tue, 18 Mar 2014 21:51:55 GMT

@Gunnar419 wrote:
@bobkmn wrote:
I am working hard to improve my credit score and it is currently 700+. My question is this, my son has asked me to co-sign for a new vehicle for his fiance. She just went through a divorce and her ex screwed things up and messed up her credit. The problem has allegedly been fixed, but her credit is still low. I know that they can make the payments so I am not concerned about that--I am just wondering if my co-signing will negatively affect my FICO score by adding additonal liabilities to my finances?

Thanks for any help I can get.
No matter what it does or doesn't do to your score in the short term, the tales of people who've been burned by co-signing are many and heartbreaking. You know your son's fiancee CAN make the payments. But WILL she? What if they break up and she decides to get back at him by burning you? What if she loses her job? What if she gets sick? What if, what if? If she quits paying for ANY reason, you get stuck with all the lates, with the repo, with the responsibility for paying any shortfall after the vehicle is auctioned off. Nightmare City.

I also don't trust the phrase "The problem has allegedly been fixed, but her credit is still low." If the problem has really been fixed, then why is her credit low? Why is your son asking YOU to co-sign, rather than doing it himself?

Sorry, I hate to sound like a grouch, but I've seen too many people whose good credit has been destroyed by co-signing. Unless you have some really, really strong reason to do this, and unless you have solid knowledge that the fiancee's finances and character are both golden, I wouldn't touch this situation.

What he said.

Ive worked very hard to get my credit score where its at. Years as a matter of fact. Im not risking it hoping someone else will pay their bills on time.
If it were me Id' tell the son to have his fiance look for a car where she can get financing. It'll cost more but if she needs a car she'll do what she has to do to get one.