||Ask Dr. Don
I'm ruining my mom's credit
Dear Dr. Don,
My mom has excellent credit, but she co-signed a loan with me to
get a 2001 car. I missed two payments, and the dealership's financial
services, I assume, reported this to the credit reporting agencies.
They called me and said the two payments I missed go on the end
of my lease, and I have to pay an extra two months more than when
my lease would be up.
My mom is also leasing, and her lease is up in three
weeks. She recently applied for a loan to lease another car, and
her credit report showed my 60-day delinquency. Is it possible for
the dealer to take that off now that they've added the two payments
to the end of my lease? My mom never had bad credit. Do you have
any suggestions on how to help out my mom? I feel so bad. After
all, she tried to help me out, and I messed her up.
Upset in Jersey,
There's not an easy solution to cleaning up your mother's credit,
or for that matter yours. From what you described, the financing
company modified your lease terms to accommodate your financial
situation, but that doesn't mean that your credit report is clean.
Your credit report is likely to list the same 60-day delinquency
as your mother's credit report. Get a copy of your credit report
to know for sure. You can order it on Bankrate's Shop
& Save page.
The good news is that one 60-day delinquency isn't
going to irreparably harm your mother's credit history. If her credit
is as good as you describe it, she can weather this problem without
losing her ability to find a good lease rate on a new car. Negative
information stays on a credit report for seven years. As time passes,
the negative information becomes less important than recent credit
Credit Reporting Act requires creditors to remove inaccurate
information from a credit report through a dispute process. But
if the information is accurate, there's no compelling reason for
the finance company to remove the information at your request.
Even without your late pays, co-signing your lease
impacted her ability to borrow. Lenders estimate how much debt a
customer can carry without being a credit risk. Your mother co-signing
your lease has reduced her capacity for additional credit because
of her commitment to stand ready to make the payments on your lease.
In addition to the 60-day late problem, the capacity
issue will influence her ability to get additional credit. So, even
though the end of her current auto lease frees up credit capacity,
your lease on her credit report will limit how big a lease payment
lenders will approve for her new car.
The best thing you can do for your mother is to make
your lease payments on time. If you can't make a payment, tell her
about it. She can then decide whether she wants to step in and make
the payment for you. When she co-signed the note, she agreed that
she was willing to make the payments if you don't. Don't let her
get blindsided by any more late payments showing up on her credit
-- Posted: Jan. 22, 2002