I personally have excellent credit, in the 800-850 range. I don't know what my younger brother's score it, but I suspect it is about as low as it is possible for a FICO score to be. He is much more entrepreneurial than I am, and he has a couple of personal bankruptcies in his history due to failed attempts at starting his own businesses. He is currently working in a steady job but has been unable to get any credit due to his low score. I would like to help him get started repairing his credit score, but I don't want anything I do to have a negative impact on my own score. I have been thinking of giving him the cash to get his own secured card as a first step, but he has also suggested that he apply with for a card with me as a co-responsible person for the account. The advantage I see in that is that I am giving him the same help without having to have an account security deposit tied up someplace. Of course I realize that I would be equally responsible for any debt charged to the card, but the intent is that he will be responsible for keeping the account in good standing under normal circumstances. Would my own FICO score be damaged just by having a joint account with someone whose personal FICO score is terrible? I would welcome comments on these, or any other, methods that someone with good credit can employ to help someone else repair their own score.
Welcome older_brother_in_mn! In my opinion, I would say fronting him some cash might not be too bad for getting him a secured card. Now having the joint account is concerning. He appears to get caught up in trying to accomplish some things that could be very risky financially. I don't think intitally having a joint account with him would hurt you because of his scores. However, as soon as that happens, the risk is very high at the least that he could put you in a bad spot, which in return could damage your credit. It comes down to how confident you are in him holding his end of the deal, and how much are you willing to risk it.
|Total Credit: $240,100||Credit Utilization: 1%||AAoA: 5 years, 7 months||Installments: Car Lease, Marcus Loan||Negatives: 0|
Let him borrow the money, or actually gift him the money for a secured card.
But under NO circumstances should you co-sign for anything or add him as an AU user to your accounts. The bottom line is that his problems will become YOUR problems.
And the fact that HE suggested you be a co-signer is troubling. It suggests that he hasnt fully accepted responsiblity for the hole he has dug for himself.
Just my opinion.
The issue is that he does not seem to have a backup plan. Just about what ever his total monthly expenses are for one month in savings would make all the difference in the world. He needs to do this for himself because it will instill a sense of pride. Here is a video that explains how to saving over a period of a year and how to keep on saving automatically thereafter. Moving Out: How to Budget - Savings Plan starts around 12:09 mark
I realize I'm late to the party on this one, but here goes:
My best advice on how to help your brother is to refer him to this forum. And yes, holding a joint/co account with him will damage your on stellar FICO since he has little experience with how to properly maintain his, (AAOA, optimum usage percentages, paying when the statement comes and before the new balance is posted, and so on). He may have no idea that just one 30-day late is truly a big deal.
Make joining this forum and regularly acknowledging what he's learned a prerequisite to any monetary help you give him. If he balks at the suggestion, then you have your answer that his idea of you helping him is simply to "give him the fish" rather than teaching him to fish.
Would you really put a 10-year old behind the wheel of your Ferrari without making sure he has now learned how to drive responsibly?