Building someone else's credit

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im_mr_awesome
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Building someone else's credit

Postby im_mr_awesome » Fri Apr 26, 2013 10:57 am

I have a short but good credit history. CreditKarma tells me I have 100% of my payments marked as on time, and I have around 30 total credit accounts. I have student loans, an auto loan, and at least 9 credit card type accounts.

I'm wanting to help out a family member who has bad credit--she's only made around 75% of her auto loan payments on time, and she has no credit cards save for one account of mine on which she's an authorized user, but I know that doesn't really count. I told her the best way to improve her credit is by making all her payments on time and paying off her auto loan as quickly as possible, then adding credit cards, but she seems reluctant and almost scared of credit cards.

If I cosign an account for her and use the card responsibly (10% max util, payoff every month) how much will it improve her credit? CreditKarma gives a TU of ~650 but she has a very limited credit history.
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djrez4
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Postby djrez4 » Fri Apr 26, 2013 12:05 pm

That's a recipe for disaster. She has demonstrated financial irresponsibility. That irresponsibility will likely continue and will be reported on YOUR credit report as a joint account-holder.

The only way it can work is if you never allow her to have the card or know the account number. Her credit will probably not improve much until the late payments drop off - seven years after they happened. She may be able to request a goodwill adjustment to the reporting of the loan if she has remained current on payments for a decent amount of time.
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im_mr_awesome
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Postby im_mr_awesome » Fri Apr 26, 2013 12:16 pm

Oh, obviously I wouldn't allow her to have the card. I'll have to let her know about the goodwill adjustment thing. Her auto loan is through a smaller company that seems to be pretty flexible, so perhaps we have something to work with. Otherwise, I don't think my help is all that helpful.
Scores on the mend...
FICO: 650 (Discover/TU, 6/23/2016)
Cards I Use Citi Double Cash, Chase Amazon, Capital One QuickSilver
Sock Drawer Discover IT, Citi Diamond Preferred, AE Visa, QuickSilver One, Walmart CC, CareCredit, CreditOne (keeping for history for now)
Short Goal Reach 680

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Z06Biker
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Postby Z06Biker » Fri Apr 26, 2013 4:06 pm

djrez4 wrote:That's a recipe for disaster. She has demonstrated financial irresponsibility. That irresponsibility will likely continue and will be reported on YOUR credit report as a joint account-holder.

The only way it can work is if you never allow her to have the card or know the account number. Her credit will probably not improve much until the late payments drop off - seven years after they happened. She may be able to request a goodwill adjustment to the reporting of the loan if she has remained current on payments for a decent amount of time.


100% agree. If you plan to do as you say, which is to add her as an AU on one/several of your cards, although never let her physically have the card (or know the #), then your increased credit limits (and potentially your AAoA's) will help lower her utilization and modestly improve her score.

http://travelsort.com/blog/how-does-adding-an-authorized-user-affect-my-credit-score-and-that-of-the-authorized-user

That being said...why are you willing to do this? If it's your son/daughter/spouse that's one thing, but if it's a bf/gf, that's entirely another. Especially, as djrez said, she's demonstrated terrible fiscal discipline.
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im_mr_awesome
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Postby im_mr_awesome » Sat Apr 27, 2013 1:18 pm

It's for an immediate family member who won't have access to the card. Likely what I will do is maintain a healthy active account for about a year, then encourage her to obtain either her own credit card or possibly a secured card and I will cancel the account. I have a pretty healthy mix, so I doubt cancelling a $500 card will damage my report, especially with much older cards in my mix.
Scores on the mend...
FICO: 650 (Discover/TU, 6/23/2016)
Cards I Use Citi Double Cash, Chase Amazon, Capital One QuickSilver
Sock Drawer Discover IT, Citi Diamond Preferred, AE Visa, QuickSilver One, Walmart CC, CareCredit, CreditOne (keeping for history for now)
Short Goal Reach 680



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