Best credit question ever! Stump the expert.

[Anonymous]

Hey Barry,

I have asked this question at least 20 times to many sources this past year and no one has ever had a clue enough to have or find the answer. I hope you are the man for the job.

Is it possible for my wife or me to improve one or both of our scores if I called the 12 c. cards we have balances on and asked to make our accounts be held in only the primary cardholders name? It seems if we split the debt by having it only in our own names that our debt load would be less and scores could go up. What do you think?

JB

[Anonymous]

Hi veryfrustrated! Welcome aboard. 

I understand that you've directed your question to Barry, specifically, but if you don't mind, I've got a few thoughts to help get you started.

First, with so little information about yours and your wife's credit profile, it'd be virtually impossible for anyone to answer your questions in the very specific manner that you seem to need. There are too many variables, and not nearly enough information with which to judge. VERY generally speaking, the answer to the question that you've asked could be a yes, a no, or a maybe if.

So, some questions (for clarity) for you:

1. Can you provide more detail about your credit card balances (whose card is it, is it joint or primary and authorized user, what's the limit, what's the balance, how old is the account, if this is an authorized user for one spouse, does it report to the credit bureaus, is it a signature card without a credit line reporting)?
2. Do you or your wife have derogs (lates, charge-offs, public records [judgments, liens, child support, bankruptcy, etc.], or collection accounts) reporting? If so, please provide detail as to which one of you have the derogs(s) reporting, and what exactly (minus any personally identifying information such as your name and the account numbers) is reporting.

It'll also help to read Credit Scoring 101 (linked in my siggie below) if you've not done so already. It'll give you some insight as to how utilization and the age of accounts play into your individual scores. And, it'll help you to understand why your question is unanswerable without a lot more detail.  

[Anonymous]

I suggest that rather than asking an opinion you go to the FICO Estimator and plug in your scenario's each way and see what it says.

A link is in my sig line.

The Estimator allows you to tell it how many accounts, ages, inquiries, amount of debt/balances and derogs.

You can plug the info in first showing you with all accounts, including the joint and the combined balances, etc.  Then plug it again with only individual accounts (not including spouses) and only the balance amount of your accounts, etc.

This gives you more useful info and will take into account the various factors or your circumstances.

Be sure to post your findings. 

[jackg]

Veryfrustated,

Here's an interesting question for you? How will you decide which debt is hers or yours or ours? Secondly shouldn't you pay off the debt with the highest % interest rate first? That way you can design milestones along the way and get a feeling of accomplishment, and it won't be quite as boring, it will become tedious.

The primary card holder is the person who applied for and received the credit. Do you disagree? An Au is only a person who is authorized to make charges and payments to your account but they have ZERO responsibility for paying the bill. Shifting debt from one CC to another cannot improve your score and a balance transfer will cost you money. I suggest you read "Credit 101" here in one of the forums and develop a plan of attack from there,  keep reading as much info here as you can.

The thing that bothers me about your plan to split the debt 50/50 is that things could go very wrong. I strongly suggest that you total up all your debt so you are aware of how much it is. Secondly make a list of how much you are going to pay each CC every month. It's only going to work if you check your ego at the door every night. This take "TEAMWORK" and I really hope you can pull yoursef thru it. Good Luck

[cobaltnv]

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@jackg wrote:

Veryfrustated,

Here's an interesting question for you? How will you decide which debt is hers or yours or ours? Secondly shouldn't you pay off the debt with the highest % interest rate first? That way you can design milestones along the way and get a feeling of accomplishment, and it won't be quite as boring, it will become tedious.

The primary card holder is the person who applied for and received the credit. Do you disagree? An Au is only a person who is authorized to make charges and payments to your account but they have ZERO responsibility for paying the bill. Shifting debt from one CC to another cannot improve your score and a balance transfer will cost you money. I suggest you read "Credit 101" here in one of the forums and develop a plan of attack from there,  keep reading as much info here as you can.

The thing that bothers me about your plan to split the debt 50/50 is that things could go very wrong. I strongly suggest that you total up all your debt so you are aware of how much it is. Secondly make a list of how much you are going to pay each CC every month. It's only going to work if you check your ego at the door every night. This take "TEAMWORK" and I really hope you can pull yoursef thru it. Good Luck

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Jackg,

  The OP never said that the debt was to be split 50/50 only that the primary account holder of each card would keep each debt. It is also not clear from the OP if the cards are joint or AU. My reading of the post is that the cards are joint. If that is the case the OP question might be a moot point as the ccc have no incentive to remove the joint holder from their obligation to pay. If they are AUs on each others accounts then the experiment would be pretty easy to try--simply remove all AU status.  

[jackg]

Cobaltnv

I was not aware of his definition of "split" is. Mine is 50/50. What's yours? More to the point I thought he was starting to play the blame game with her and there are no winners, except the lawyers, in that scenario. I could see he was not real clear about of the responsibilities os Primary owners, AU's,  and "JOINT OWNERS" that don't exist anymore because of the associated rik of trying to collect from joint owners. The exceptions are

1. Mortgages

2. HELOCs

3. Lines of credit

I was just trying to help the 2 of them by getting them to talk about their circumstances rather than yelling at each other.

[Jazzzy]

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@Anonymous wrote:

Hey Barry,

I have asked this question at least 20 times to many sources this past year and no one has ever had a clue enough to have or find the answer. I hope you are the man for the job.

Is it possible for my wife or me to improve one or both of our scores if I called the 12 c. cards we have balances on and asked to make our accounts be held in only the primary cardholders name? It seems if we split the debt by having it only in our own names that our debt load would be less and scores could go up. What do you think?

JB

---

The OP's question was simply about improving FICO scores. I didn't read anything into his post about splitting debt due to a divorce or disagreement.

I think the answer to his question about improving scores will depend upon who is the owner of each account, who is the AU on each account, etc. Then, we would have to know how much is owed on each card. Utilization would definitely be important to the answer on whether or not they would see improvements in their scores.

Let's not read more into this question than was asked. I don't believe we have enough information to give an answer.

[jackg]

Lynette,

Sorry to disagree but the OP did say, "It seems if we split the debt by having it only in our own names that our debt load would be less and scores could go up."

It's the second last sentence he posted.

The answer to his question is no. The scoresthey have already take into account who is primary, who is AU, and who is joint. The scores are what they are and they can't change them by doing what he proposes to do.

[Anonymous]

FICO does not take into consideration INDIVIDUAL vs. JOINT vs. AU.

Therefore, the question comes down to this: 

1.  Would the utilization remain constant (percentage wise)?  If yes, then this part will not be a factor.  If no, then this will be a factor.

2.  Would the reported debt load be less (in dollars)? If yes, then this can help because the total dollar value is a factor.

3.  Would your AAoA be affected (some accounts newer/older than others)?  If yes, then this will be a factor.

4.  Would your oldest account age be affected?  If yes, this will be a factor.

5.  Will your "mix" of credit be affected?  If yes, this will be a factor.

6.  Will the number of accounts with a balance be affected?  If yes, this will be a factor.

The possible UPS of splitting the debt, therefore, are:

1.  Reducing number of balances

2.  Reducing total dollar debt

3.  Increasing AAoA (by removing yourself from newer accounts of spouse, your AAoA may increase)

4.  Decrease in utilization if your percentage went down from the split (meaning more went to spouse)

The possible DOWNS of splitting the debt are:

1.  Loss of oldest account

2.  Loss of "mix" in credit

3.  Increase in percentage of utilization if the split raises your percentage.

4.  Decrease of AAoA if spouses accounts helped your AAoA and thus split removed that benefit.

There are other factors, and there are the combined "binary" effects of all factors.  It is also doubtful that all of your accounts would allow a joint to be removed.  Most CCC's do not allow for this.  Therefore this is all theoretical.

Message Edited by txjohn on 08-20-2009 09:57 AM

[Anonymous]

Thank you all for responding. Just so you know, there is no splitting or divorcing. I simply wanted to know if that could change scores as I have never heard anyone else ask, let alone get a real answer to that question. For example, our home loan is in my wife's name, so it does not show up on my credit report. That is a large amount of debt that does not seem to figure into my score but does on hers. I thought, if I can offload 20 -30k of cc debt from my accounts, couldn't I have a better score? We were hoping that even if one of our scores could be better than the other to qualify for future credit, it would be better than two mediocre scores. I would love to be able to get a debt consolidation loan and be able to pay off at a reasonable rate instead of the 20 - 30% the ccc are gouging me for now! I also could use a business loan to expand my small business but with credit so tight, those both seem like pipe dreams these days. (Anyone know a good lender who may do this?) Even with all I explain below, my fico score is 674, maybe surprising. The biggest, almost only thing that weighs down our scores is the high amount of debt.

We are, hold on here, in $125,000 of cc debt and have been barely able up to now to pay on time the min. payment. Since all the rates went up like crazy last summer/fall we have been barely making it and can not sustain it any more. I think most would agree these ccc's are rapacious and outrageously out of control. Here is another good question for you experts. We are pondering entering a debt management program and they can not say whether or not our scores would change for better or worse. They do say we would be paying the debt as agreed, on time, and with no debt reduction element to it. I know these companies are little more than collection agencies for ccc's and are funded by them. Has anyone dealt with Springboard and have an opinion? They have been in business since 1970's. Seem to be reputable. Their plan is for CCC's would reduce our int. rates, effectively closing our accounts (12 of them) and we would pay all off in 59 months. I assume most other DMP's as they are called would be similar. They would charge a $50 set up fee and $10 per month to administer our program. Do any of you think this is a good plan? If not, alternatives? We are obviosly trying to avoid BR!

Another option is debt reduction companies but I have not been able to find any that are reputable. They all want you to immediately trash your credit by not paying anyone for months while you make payments to them to build up your "account" with them so they can pay off your cards. Does anyone know a company that does this the right way, or a better way? All I have seen seem very scam-like. It seems with this option our credit would be trashed anyway because we are not "paying as agreed". This seems to be the middle option between DMP and bankruptcy that I hoped would work but do not see it now as very viable. Any opinions?

I have asked many questions here and hope between all of your response we can cover all of them as we need to make some very intense decisions very soon. Thank you all for your expertise and willingness to help.