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My girlfriend is financially responsible, but her credit score is being negatively impacted by her ex-husband. He kept the house when they separated, but apparently she was never removed from the mortgage, which she discovered upon receipt of a notice of non-payment from the bank. It seems he has abandoned the property and stopped paying a couple months ago, so she's collecting these derogatory marks. Her FICO has dropped from the low 700s to the low 600s (so far...). Hopefully it doesn't go to foreclosure. (Also, hopefully the court can issue her documentation with which she can contest the account/derogatory marks and have them removed.) Because of this recent plummet, I want to help shore up her credit.

Surprisingly, this is not a post where I ask about cosigning to help her open a new account. She does not currently have the intention of opening new accounts, though she does not have many in her history.

We are in a serious relationship that we are confident will culminate in marriage.

1) General question

What can I do in either the short or long term to bolster her credit?

It is my understanding that some credit card issuers will report history for authorized users, but I would not add her as an authorized user to my cards until we are married.
I'd reckon having a current mortgage on her report would be beneficial, but I don't think there's a way to simply add her to my existing mortgage without refinancing the whole thing. (This also wouldn't happen until we are married, anyway.)

2) Specific question

Is there any harm in adding her as a cosigner to my auto loan?

I expect to purchase a vehicle soon, and I will probably finance it, especially if a 0% promotion is available. Would I face any negative impact by adding her as a cosigner? Could it lower my chance of approval? Could having her associated with one of my accounts affect my future creditworthiness somehow? The only risk I see -- albeit very low IMHO -- is to her: she would be trusting me to make payments on time (as I have done my whole life), but I don't see a risk to me. Even if not, for the sake of her credit, is this even worth doing? I do not need her income for loan approval. This is only to add more positive activity to her credit history.

Additional Details
My credit:
FICO: 800+
No derogatory marks
1 mortgage, 5 credit cards (active)
3 auto loans, 2 credit cards (closed)

Her credit:
FICO: 600-630
A few late payments
1 mortgage (delinquent)
1 auto loan, 1 student loan, 1 credit card (active)
1 student loan (closed)

Thanks for your advice and recommendations. Sorry that I'm verbose.

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    Find buyers, pay off the house, you know, the impractical obvious. The last thing she needs is to be a cosigner on anything – CQM Nov 20 '16 at 19:17
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This is an all too common problem and is not easy to resolve. Divorce agreements do not alter prior mortgage contracts. Most importantly, the bank is not required, and will not normally, remove the girlfriend from the mortgage even if she quitclaimed it to her Ex.

If he has abandoned the property there is a good chance he will not make any more future payments. She should be prepared to make the payments if he doesn't or expect her credit to continue to deteriorate rapidly. She needs to contact her divorce attorney to review their mutual obligations. A court can issue orders to try to force the Ex to fulfill the divorce agreement. However, a court cannot impose a change to the mortgage obligations the borrowers made to the bank.

Focus on this. It's far more important than adding her to a car loan or credit card. Sorry for the bad news.

As for the car loan, it's best to leave her off the loan. You will get better terms without her as a joint owner. You can add her as an additional driver for insurance purposes.

Adding her to your credit cards will help her credit but not a lot if the mortgage goes to default or foreclosure.

  • Thanks for the insight. You've answered all of my questions. – Wiseguy Nov 21 '16 at 2:30
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In the short term what does it matter if she has poor credit? Just let it ride and focus on the important things.

In the long term the most important part is "completing the divorce". That is separating all parts of her financial life from her ex-husband. This might mean she takes possession of the house and has him off the loan, or she gets off the loan and this may mean forcing a sale.

If there are children or alimony involved she needs to build her income to the point that paying child support or alimony does not impact her budget. If she is on the receiving end, then she should budget so those items are bonus money and not counted on.

She is flat broke and does not need to worry about borrowing money at this juncture. In this case a low credit score is a blessing.

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    You are absolutely correct about the divorce being the biggest priority. However, I have no control over that, so my question is more about how I can help (if at all). And you're right, it may not be a big deal even if it defaults since she's not seeking new credit. Once she's done paying lawyers, she will be comfortable financially. Sorry to be unclear; those auto loans are historical. All are closed. My cards: 1 store CC (unused since 0% promotion, will be closed) and 4 regular CCs for various rewards, none carry a balance. My only debt is the mortgage (~30% equity in the house). Thanks. – Wiseguy Nov 21 '16 at 15:26
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    @Wiseguy I believe you heart is in the right place; however, sometimes the best help one can give is to allow the other person to work through it themselves. Support and encourage, but beyond that might be too much. As men we tend to be solution oriented, when I woman might want to just vent their feelings, not be provided with a solution. – Pete B. Nov 21 '16 at 15:39
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    Well, I certainly support her in those ways more than anything else, but my motives weren't solely altruistic. ;-) Since I enjoy optimizing my own finances and I'm operating under the assumption that we will get married, I figured I'd explore the possibility of taking a minor preemptive step toward optimizing our eventual joint finances, especially if a different house becomes a goal in the coming few years. Fortunately, there's really no emergency or dire situation regarding our finances. More of a thought experiment than anything else. I appreciate your input. – Wiseguy Nov 21 '16 at 15:54
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    If I was your parent, I would be very proud of you. – Pete B. Nov 21 '16 at 16:00

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