will removing an auto installment affect my FICO?

[Anonymous]

I have several student loans that show as installments on my CR. These loans come off deferrment in January 2009. I am also a joint owner on a 2004 Eclipse that has a $9000 balance. This loan is being reported on both of our CR-never late and in good standing because it is on a military allottment. What affect, if any, will removing my name from this loan have on my FICO? Would it be best to leave the account as is or have it put solely in his name since it is in his possession? I don't want to lose any points on my FICO for doing something foolish so your input will be greatly appreciated. TIA

EQ FICO: 705

[Junejer]

Hi Tonnie. My first question is how will you get your name removed from the loan. They would have to run his credit again and he would have qualify for the loan on his own. Right now, they have two people on the line, should something go wrong. Under your proposal, they would only have one.

That said, if it were to happen, the account may remain on your report for up to 10 years of it closing. So, it shouldn't have any affect on your CRs.

[Anonymous]

Thanks ByrdMan for the prompt reply. My divorce attorney said that all I need to do is call up Mitsubishi Motors or submit a request to have my name removed from the car loan. I knew that sounded too simplistic but I assumed she knew what she was talking about. I guess since the loan is in good standing, I will leave well enough alone. Thanks, again.

[Anonymous]

If this is a divorce situation I would reccomend trying to get this loan out of your name.  The way your attorney has described it, is as you said too simplistic.  While it is true that the account being in good standing is helping your credit and having it paid off could slightly lower your score, there are more important things in life than a high FICO score.  Your ex may be making the payments in a timely manner now, but who's to say that he won't have financial trouble sometime between now and when the loan is paid off.  If he makes late payments, that will negatively effect your credit more than the possible drop from having the loan paid in full.  Unless the creditor who has the financing on the vehicle currently is just really nice, your ex will likely need to apply for a new loan somewhere else by himself in order to get you off of the loan.  Remember that just because your divorce decree says that he is responsible for the payment, the creditor doesn't care and isn't bound by the decree.

[CreditAble]

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@Anonymous wrote:

 I am also a joint owner on a 2004 Eclipse that has a $9000 balance.

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In addition to what others have advised.  

 Do you actually legally own half of the car? Is your name on the title? Will your ex be willing to refi the loan in his own name in exchange for giving him your equity in the vehicle? Is it possible to sell the vehicle to pay off the loan?

 The vehicle is probably only worth $9,000 or less. In a year or two it will most likely be worth much less than the balance owed. Can your lawyer use legal means to force a sale to payoff the debt if you own half of the car?  

 If somehow you own half the debt but not half of the car, you still should see if you can access the account online since it is your account. If you are stuck with joint liability for the account you can at least monitor the account and make sure payments are made on time. You would have early warning if your ex does not live up to payment obligations should they be specified in the divorce agreement. You would also be able to protect your credit by making payments before they become more than 30 days past due.

[Junejer]

No thanks necessary Tonnie. Hope it works out for you in the proper manner.

[Anonymous]

I could have chosen a better word than "joint owner" so I apologize for that. Mitsubishi Motors is the first lienholder as they are the ones who financed the Eclipse. When the remaining $9000 is paid off, we are joint owners. With that said, I am jointly liable until that happens. 

When I searched Kelly Blue Book, the car is worth about $11485.00 in our area. The car is in excellent condition with less than 30,000 miles. I know it is steadily depreciating so I know the value will be far less in a couple of years. The car has hardly been driven because he has done 2 tours in Iraq, 2 in Korea since the car was purchased. It is garaged more than it is driven. Since my ex is career military and within 3 years of retirement, I am not worried that he will not be able to pay for the vehicle. It is on allottment. I have online access to the account and it is reported on my CR as well.

If he is willing to refinance, he has never said so but it is certainly something I will ask him to do. He has a very sound financial history and a great FICO score so refinancing should not be a problem. I just think it is bad policy to be in this joint arrangement. When I find out something, I will definitely post an update.

Thanks again for your input and suggestions.

[Anonymous]

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jb1004 wrote: 
Remember that just because your divorce decree says that he is responsible for the payment, the creditor doesn't care and isn't bound by the decree.

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Good observation! I definitely did not know this!

[Junejer]

Tonnie, I have posted in here adnausium about my woes with a lease that was in my name, but my ex was awarded the vehicle. Trust me, when she missed a payment, I felt it. I tried to get it refied in her name, but they wouldn't do it. I was still the responsible party.