Can friends help fix debtor's credit? - Scripps News

By STEVE BUCCIbankrate.com Monday, December 10, 2007

Dear Debt Adviser,

I am 46 old age old and have got worked for the New House Of York Populace Library for 13 years. I have got a subprime recognition mark owed to late payments and a foreclosure. Iodine have got been trying to mend my recognition so that I may be able to buy a place again, but my mark stays low.

I recently heard writer and publishing house Evan Hendricks state that a individual can now affix his or her recognition to an authorised user who have better credit. This is supposed to hike the first person's recognition score. Are you familiar with this idea? Any aid is greatly appreciated. -- Suzanne

Dear Suzanne,

Yes, I am familiar with paying to better your recognition by riding the coattails effect of person with good credit. You make this by becoming an authorised user on one or more than business relationships of the individual with sterling credit.

Originally, the thought was to hike a child's or spouse's recognition mark by issuing a card in their name as an authorised user on the parent's or spouse's account. However, person establish a manner to do money on this seemingly guiltless procedure and it have been taken to a much muddier and less ethical level.

Fortunately, this loophole have been closed, although I conceive of there are still people who will take your money even though it won't change a thing.

FICO, the 800-pound Gorilla gorilla of recognition scoring models, no longer sees authorized user business relationships when calculating recognition scores. They made the alteration because people began buying better recognition from unknown people who had good credit, which, in the eyes of lenders, was fraudulent. From the loaner point of view, you look better on paper, but in reality, your recognition state of affairs stays the same. Person else's credit is being reflected as your own.

An unfortunate side consequence of the FICO action is that households have got one fewer tool to assist each other financially. In addition, FICO's determination intends that recognition tons have got gone down for many legitimate authorised users.

I have got a much better thought for you: Focus on making some basic alterations in your life that volition eventually demo up in your score.

It won't better your recognition as quickly, but it won't be 100s of dollars either. And best of all, it will not only change your credit, but your life as well.

Trying to repair a recognition mark focuses your energy on the incorrect end of the transaction. You had a foreclosure and then you got bad credit. Even if you had a sham good recognition score, you would still have got lost your home.

What I'm getting at here is that if you change your behavior, your mark will improve. Focusing on a figure as a agency to better your mark may not change anything, and what a waste material of an chance that would be.

You have got a echt ground to make some cardinal alterations -- don't settle down for window dressing. Here are some actions I urge that volition rise your mark over clip and maybe even change your life.

6 stairway to break credit

1. Set some long- and short-term goals. You already have got a great long-term goal -- purchasing a new home.

2. Put a fiscal terms tag on each goal.

3. Write down a simple program that volition acquire you there. If you necessitate help, contact a good recognition counsellor for a budget that includes allocating money to live, have got some fun, wage your measures and, yes, even save.

4. Wage everyone you owe on time, every time. Don't bury to pay yourself, too.

5. Use a assortment of recognition merchandises for different needs. Don't finance everything using your recognition cards.

6. Save for life's surprises and your goals. Yes, I said this twice, because it's that important.

(Steve Bucci is president of Money Management International Financial Education Foundation. Visit www.moneymanagement.org for further debt advice. If you have got a inquiry for Steve, e-mail debtadviser(at)bankrate.com. The Debt Adviser is a weekly characteristic of bankrate.com. For more than narratives visit scrippsnews.com)