Dear Dr. Don,
I’ve co-signed a loan for someone who developed a bad habit of paying three days late every month. Will that automatically reflect poorly on my own credit record as being a late payer?
I’m thinking of making a payment on the loan myself without telling the primary borrower I co-signed for so that the payment schedule is always 27 days ahead, instead of late. Is this a good idea or a waste of money?
Thanks for your prompt reply,
— Tom
Dear Tom,
I like your proactive approach to the situation, but it might not be necessary. Your credit history typically isn’t negatively impacted until the loan is 30 days late. It’s possible that the late payment falls within a grace period. I’d guess that’s the case if the person isn’t being hit with a late fee.
If this has been going on for a while, check your credit report. You can get one free copy per credit reporting agency per year. I like to suggest that people stagger their free reports so they get one every four months from one of the big three reporting agencies: Equifax, Experian and TransUnion.
Before considering making one advance payment, why not talk to him or her? You might be able to learn why the borrower is consistently making these payments a few days late. After that, he or she might either get with the program or explain why the current due date isn’t working out. The lender may be able to adjust the due date by a few days if there’s a paycheck timing problem.
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