My boyfriend is ruining my credit
She co-signed a car loan for her boyfriend, and he has a track record of not paying on time.
This post comes from Christopher Maag at partner site Credit.com.
Credit.com reader "Jenna" blames her decision several years ago to co-sign a car loan with her boyfriend on being "young and dumb." Now she's worried -- understandably -- that his continued inability to make on-time payments has irreparably hurt her credit score. Her boyfriend has made "over a dozen late payments (30, 60 and 90 days) on the loan over the past two years," she wrote in response to a recent story.
And there's more potential danger lurking ahead. If Jenna's boyfriend is late again, Jenna's credit report could take another hit. If the car gets repossessed, the lender could also sue Jenna for the remainder of what's owed.
"If this car gets repossessed, they're going to come after her for any deficiency," says Gerri Detweiler, Credit.com's consumer credit expert. "She could end up owing a big chunk of money."
Now Jenna is trying to figure out what to do. She can't afford to pay off the car loan. She owes $10,000 in credit card debt of her own.
"Other than his late car payments, I have not been late on a single payment for anything in my name," Jenna says. (Post continues below.)
While this might seem to be a string of bad news, it actually isn't as bad as it appears, says Barry Paperno, Credit.com's credit scoring expert. First, while Jenna's boyfriend regularly fails to make the car payment on time, the loan "must be in relatively good standing. Otherwise, the car would've been repossessed" already, Paperno says.
The other good thing about the car loan is that it's about to go away. In less than a year, the car will be paid off, Jenna says.
"This loan doesn't have that much longer to go," says Paperno, "so if she can manage the payments on this loan, making sure they get paid on time, her credit will be able to recover if she continues paying all of her accounts on time."
That means the next few months are critical. Jenna needs to make sure that her boyfriend makes all of the remaining car payments on time. If that means she needs to be more assertive with her boyfriend, so be it.
"She needs to know that when you're a co-signer, that's your loan," Detweiler says. "That car that he's driving is her car."
Meanwhile, Jenna might need to give up on some strategies that have little chance of success. She tried to convince her boyfriend to let her out of the loan. "I have asked and pleaded for years to be removed from the loan, but he simply doesn't care," Jenna writes.
Her boyfriend may not care about trashing her credit, but when it comes to removing Jenna from the loan, there's nothing he can do. That decision isn't up to him. Lenders don't let co-signers remove themselves from loans once the loan goes bad. In fact, from the lender's perspective, this loan is working exactly as it should, because if the boyfriend loses the car, there's still someone left (Jenna) to pay the rest of what's owed.
The best advice for Jenna, and anyone in a similar position: Take the middle path. As long as she has no late payments on any of her other credit accounts, the damage from this repeatedly late car loan will disappear from her credit report rather quickly. As long as she makes sure that the car is getting paid off on time, and definitely not repossessed, "her score will recover," Paperno says.
More on Credit.com and MSN Money:
- Can you really get your credit score for free?
- Can you have too much credit?
- How much will 1 late payment hurt your credit scores?
- The most and least expensive cars to insure
- Son sticks mom with $20,000 debt
- Calculator: How much vehicle can you afford?
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
State Farm says cost of deer-strike repairs up 14 percent, and drivers' odds of hitting one have increased as well.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'