Clueless...what did I do?

[Anonymous]

Hello,

I am 22.  I know the FICO score is a bit different, but I had three different credit scores from the three bureaus: 723, 730, and 743.  As a favor, I let a friend put a $40,000 car under my name.  I thought it would make my credit score go up, if the car was paid off in a couple of years.  However, I now need to buy a car and I don't know what to do.  I highly doubt I have room for another car, and I have no clue what this is doing to my credit score.  The car has been under my name for two months, would it look bad to have it removed? Should my friend refinance with someone else, or do I "sell it" to the next person who is going to help?

Thank you,

Cynthia

[Anonymous]

I personally would not let my "friend" use 40,000 of credit under my name. What if your friend is late making payments? that will destroy your credit! If I were you I would have your friend put this loan under someone elses name, or better yet, their own name! It is going to take many, many years to pay off a 40,000 loan, what if your not friends with this friend say 2 years from now? Get out now while you can!!!

[acadia11]

This is a joke post, right , if it's not,   you let a friend put a $40,000 car in your name, or are you a co-signer? It will make your credit score go down initially, i'm not sure how long it takes before it starts helping your score, maybe 6 months??? make sure this person is never ever ever ever ever late, on the car payment.  You can't have it removed from your report, since it's in your name.

[Anonymous]

Your friends installment that you co-signed under your name will only help you. Yes it did bring your score down a tiny bit but not much. You will gain points after PIF too.

You can have a few open installments on your credit at the same time and still be fine. It is very different from revolving credit. So if you let your friend borrow a credit card, yes that would hurt your score far more while their was a balance. However you might have to explain how you are going to afford 2 cars to the lender. I'm sure you already know what will happen to your credit if your friend is late on 1 payment or fails to pay. But besides that you should be prime with your scores if you bought them directly from the CRAs. Just be careful when co-signing because if they miss a payment you are responsible to pay it and any latenesses stay on your credit report for 7 years. Good luck shopping for a new car, you should be ok with scores..

[Anonymous]

This op already took the car loan 2 months ago. If not a Co-signer their might be some legal issues. I hope your relationship with this friend is a good one. Here is another option for the op. Perhaps you can get your friend to refinance under their name. Pay off the loan that you currently have as a Co-signer. That will not only boost your score when it is paid, but remove you from being liable for debt. Good luck.

[Anonymous]

The OP had a good idea, but bad execution of said idea. Rather than placing themselves at the mercy of someone else to the tune of $40K, the OP should have just gotten a smaller installment loan for themselves, then paid it off ahead of schedule.

[Anonymous]

I think everyone missed the point here-

OP is saying the DTI maybe too high for her to get car loan of her own.

With your scores and you can document your friend is making the payments it should not be an issue.

[Anonymous]

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@Anonymous wrote:
I think everyone missed the point here-

OP is saying the DTI maybe too high for her to get car loan of her own.

With your scores and you can document your friend is making the payments it should not be an issue.

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Yes, but I never recommend co-signing. Ever. When you co-sign, you are potentially on the hook for the entire balance of the loan, plus the credit fallout if the other party is unable to make payments. This can pose a problem even if the intentions of the other party are right and honorable. What if the other party becomes disabled, or worse?

When you co-sign, you wear a T-shirt with a big red target painted front and back, walking right in front of Old Man Murphy himself (of Murphy's Law fame) saying, "Please, take a shot or two at me, I'm wide open!"

Another point: in addition to potential liability for the loan itself, in many states if you co-sign, you are a co-owner of the vehicle. This is America, the Land of the Lawyer, Home of the Lawsuit. If the other party is in an accident, even one you had nothing whatsoever to do with, guess who can be sued? That's right...you can.

Message Edited by TheNewWorldMan on 09-06-2007 06:29 PM

[Anonymous]

Totally agree. The OP needs to tell the person they need that car refi'd in their own name w/ another co signer- or sell the car outright.

Co signing even for fam members can have its problems. It should never be entered into unless there is some way you can "secure" the payment in advance for the life of the loan.