Question about co-signing.

bobkmn · ‎03-15-2014

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.

Current scores: Experian-693 Equifax-720 TransUnion-727
Gardening since 4/7/2014 - Mouse over card for limit.

Anonymous · ‎03-15-2014

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?

bobkmn · ‎03-15-2014

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!

Current scores: Experian-693 Equifax-720 TransUnion-727
Gardening since 4/7/2014 - Mouse over card for limit.

Gunnar419 · ‎03-15-2014

@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.

09Lexie · ‎03-15-2014

@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

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Anonymous · ‎03-15-2014

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

RobertEG · ‎03-15-2014

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.....

Anonymous · ‎03-15-2014

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.

Anonymous · ‎03-15-2014

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.

Anonymous · ‎03-15-2014

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.