I cosigned for my son to get a vehicle, and I was unaware he missed a payment. I just found out by checking my credit report, and now my credit scores have gone from "Good" to "Fair." The lender never contacted me. Can missing one payment really affect your score that much? How do I now build my scores back up to the "good" category?
As a cosigner, you share full responsibility for the debt, even if your son was the primary account holder. The late payment will appear on both of your credit reports. The single most important factor in credit scoring is your payment history. Missing even one payment can have a significant negative affect on your credit scores, especially if the missed payment was recent.
How Can I Improve My Credit Score?
There are many different credit scoring formulas, and each one can have a different numerical range. As a result, what is considered a "fair" or "good" score may vary from one credit scoring system to another. However, the most important thing you can do to improve any credit score is to bring all of your payments current and make sure they are made on time going forward.
Even though the account statements may be going to your son, as the cosigner you are still responsible for making sure the payments are made on time. If necessary, consider logging into the account or contacting the lender directly to ensure the payment has been received each month.
The second most important factor in credit scoring is your utilization rate. Your utilization rate is the total of all your credit card balances divided by the total of all your credit card limits. While credit cards are likely not an issue in your case, if you are trying to increase your credit score, paying off or significantly reducing the balances on your revolving accounts can help you do so. The lower your balances, the better for your scores.
Pay Attention to Your Credit Score Factors
When your ordered your credit score, you should have also received a list of the factors that are currently affecting you. Those factors are specific to your credit history and will let you know what you can do to improve your overall credit rating.
Although the actual credit score number may vary from one company to another, the factors affecting your scores will generally be the same. Use the factors to identify what needs work in your credit history. Over time, doing so will cause all your scores to improve.
Thanks for asking,
Rod Griffin, Director, Consumer and Education Awareness