Do you have a question about consumer credit? You may find an immediate answer by using the search engine. If you can't find what you're looking for, please fill out the form, being as specific as possible.
Please note: The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team will include it in a future column.
The information contained in this column if for educational purposes only and is not legal advice. You should consult your own attorney or seek specific advice from a legal professional regarding your particular situation.
Please understand that Experian policies change over time. Column responses reflect Experian policy at the time of writing. While maintained for your information, archived responses may not reflect current Experian policy.
Topics addressed on February 4, 2009:
Cosigning for stepson can hurt your credit report
I cosigned for a car for my stepson. I thought that if he didn't pay I would be responsible for the loan, and I was fine with that. What I didn't realize is that if he was late with his payment, my credit would be affected. I had a credit score of 803 when I signed. He missed payments, and now my credit score is lower. Even though this is not my loan, will my credit report be affected for seven years? Is there a way to correct this?
There is no correction to be made. When you cosign for a loan you are accepting full responsibility for payment of the debt, just as you said. That means the account and its payment history will appear on your credit report, as well as your stepson’s report.
That is why I caution everyone to be very careful about agreeing to cosign for anything. When you cosign you vouch for the other person’s character, agree to pay the debt if they don’t and sign a contract that says you will suffer the consequences equally if that debt is not paid on time and in full.
I know that good hearted people want to help others, but you have to protect yourself. The most important way to do that is to establish access to the account. Many accounts are accessible online or by automated phone systems, and all you need is the password. It places the burden on you to check the account each month before the due date to ensure that a payment has been made, but it is better than letting your credit be ruined.
Also, if there is a clear understanding by your stepson that you are going to be checking and that late payments will affect your credit, that puts more pressure on him to manage the account responsibly. That can be good for him as he learns about debt and the importance of his credit report.
The late payment or payments will remain on your credit report for up to seven years from the original delinquency date of the missed payment. However, the further in the past the late payments occurred, the less impact they will have on your credit scores. A pattern of late payments, though, will take longer to overcome.
Bad things happen to good people, and credit scoring systems recognize a one-time event, which usually does not mean you will be a bad credit risk.
Thanks for asking.
- The "Ask Experian" team