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Helping a family member with poor credit

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Helping a family member with poor credit

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.

Message 1 of 8
7 REPLIES 7
Valued Contributor

Re: Helping a family member with poor credit

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: $240,100Credit Utilization: 1%AAoA: 5 years, 7 monthsInstallments: Car Lease, Marcus LoanNegatives: 0

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Message 2 of 8
Frequent Contributor

Re: Helping a family member with poor credit

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.

    EQ=846        TU=834        EX=822      INQ=0/0/2      UTIL=1%        AZEO
Message 3 of 8
Established Contributor

Re: Helping a family member with poor credit

Out of all the options - Adding him as an AU is the SAFEST thing to do. It can’t hurt you and can only help him. DO NOT give him a card. Sock drawer in your drawer. Lol.
Started 6/6/2018 EX - 588 ; EQ - 667 ; TU 575

Updated 12/2018


Message 4 of 8
Established Contributor

Re: Helping a family member with poor credit

If you’re willing to give him the cash for a secured card, I’d say that’s a good start. If you make him an AU on one of your cards though, don’t give him the actual card. Let him reap the benefits without hurting your scores. Too much risk otherwise.


October 2019:

Stats:
Message 5 of 8
Contributor

Re: Helping a family member with poor credit

 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

TU 791| EQ 795 | EX 784
As of 06/01/2019: 818 Eq 797 TU 821 Ex
Message 6 of 8
New Member

Re: Helping a family member with poor credit

I was in this same similar situation. I am the risk taker, I had sub par to bad credit. My wife had excellent credit and it was the best to have one person with great credit and the other with lousy credit. She started to add me as an AU to all of her accounts which at the time weren’t many, but what this did is give me the credit history and the timely payment history that I needed.

Your brother needs to realize that these things take time. Add him to most or all of your accounts and keep the cards. If you are scared, don’t even tell him. Ask him for his SSN and call your company and put him on the cards. In 4-6 months he will be extremely grateful for the opportunity. If he wants to continue to risk take with his credit he is free to do as such.

Putting him as an AU without giving him the actual card is the BEST THING you can do to help him. DONT GIVE HIM A DOLLAR.

If he doesn’t have the money for a secured card he will take the risks and mess up the money on it also. Give him the opportunity of having great credit without any loss to you.

Message 7 of 8
Regular Contributor

Re: Helping a family member with poor credit

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?

Hit the 24-month mark January 2019! All HDs, save one dropped off. BK7 is 5 yrs post.
Message 8 of 8
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