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I have a question regarding payment history. I am trying to help a friend improve his credit score. My biggest challenge is that my friend has more than 20% in late payments.

My question is how to decrease the rate of late payments on the credit score.

  1. Do I charge each card that he has and that he has under me small amounts each month and make sure to pay it off on a monthly basis?
  2. Do I not make any charges on the credit cards?
  3. Is no activity on the credit card considered positive, negative or has no effect?

Thanks

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    Danger, you have added somebody with less then stellar payment history to your accounts. Assume that their negative items will hurt your score. Plus you open your credit lines to them which can be risky. – mhoran_psprep Apr 9 '14 at 15:06
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    @Pranav adding additional authorized users (not co-signers) to your credit card may not affect their credit scores at all. But it does affect your credit and finances, as you're allowing the other person access to your accounts. – littleadv Apr 9 '14 at 15:15
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    Shoot yourself in the foot, it will be less painless then these choices you are making. – Pete B. Apr 9 '14 at 15:36
  • I have added another user, but they don't access to the accounts. Also I can trust the user. – Pranav Shah Apr 9 '14 at 16:03
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    What does it mean to say that the user that you have added cannot "access" the account? As littleadv points out, what you do with your accounts such as paying off each month's statement in full in timely fashion will not be reflected in the authorized user's credit report and scores (e.g. son or daughter authorized to use parent's card) but will show up on co-signer's credit reports (e.g. spouse). Also, if your friend knows the card number (and the CVV number), he can use these for on-line shopping, and then you have to pay off these charges. Take Pete Belford's comment to heart. – Dilip Sarwate Apr 9 '14 at 18:36
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As I understand it, adding your friend to your accounts as an authorized user may or may not affect his credit score. It depends on whether or not the financial institution decides to make reports for the authorized users. Many do, but not all. If they do, then, assuming that your friend no longer makes late payments, the late payments will age and he will have a new account on his report that shows on-time payments, which might help his score. Since you don't intend to actually let him charge anything or pay anything, this is simply a trick to try to artificially help his score. It may not actually help his score much, since it doesn't erase the late payments on his report (only time will do that).

Keep in mind that, unless your friend is your spouse, you are playing with fire. You need to make sure he never finds out the credit card number. If he does and decides to use it, you are legally responsible and he has no responsibility to pay.

To answer your question about his card: When you add him as an authorized user, they might issue him a card with a unique number, but it is tied to your account. Therefore, it doesn't matter whether you charge something on his card or yours; it goes to the same account and you get one bill. So when his card arrives, destroy it, and make sure he doesn't get the number.

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Change the way your friend thinks about money, if you have a perfect score and co-sign for them and provide access to credit that will make their life better, if they don't know how to manage it, they will repeat their mistakes and hurt both of you in the process.

While you work on the education process and they work on the repayment process as well, wait and do not give up. With no new mistakes, things should start to look better in two years, and improve in 7 years.

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