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Do you have children that are approaching the driving age? Are you kids looking into buying their first car? One of the worst things you can do is co-sign for a an auto loan for your kids because, let's face it, they're probably going to make a couple of late payments. If you don't want those late payments showing up on your credit report then you might decide to pay the auto payment yourself. That's not fun. Paying someone else's bills has never been my idea of a good time. I have a better idea.

There is a better way. Your kids cannot get financing because they have no credit at all. Instead of having them go out and establish credit just so they can buy a car, you can have them piggy back on your credit.

Piggy back on your credit? What the heck does that mean?

If you were to add someone to your credit card or department store charge card as an authorized user, that account and its entire payment history will probably show up on that persons credit report. This will give them instant credit. The best part is that these accounts are not new. New accounts really don't help your credit scores because they lack seasoning. Your credit cards are already seasoned. You can add year and years of history to your children's credit be adding them to you accounts as an authorized user. This process is commonly referred to as "piggy backing".

Once the accounts show up on their credit report, their credit scores will now take into consideration the activity on those accounts and the credit scores will sky rocket. Now your kids can go out and get a decent car without getting ripped off by the auto financing companies. The best part is that if and when you kids make a late payment on their car, it won't affect your credit at all.

The only risk is that once they have been added as authorized users, they are legally allowed to use the account if they are given the card. Just don't give them the plastic and you will be fine. Also, each creditor has a certain element on control that they will give you so that you can determine how much an authorized user can spend on that account. Call you credit card companies to find out more about what the potential risks are but don't tell the customer service agent that you are trying to increase your children's credit scores. They are trained to tell you that it doesn't work. If it really didn't work, I'd tell you because all of y accounts are authorized user accounts and my credit score is still in the 800s.

PS: Thanks Grandma for adding me to you 20 year old credit cards as an authorized user. Now have excellent credit scores and I can finance anything I need to and get great terms and payments.

Warm Regards,

Jack B. Olson

TrueCredit 3-Bureau Credit Report & Credit Score

You're thinking about a BK huh? Well, it will stigmatize your credit for at least a couple of years. Chapter 7 BKs will stay on your credit report for 10 years from the discharge date. Chapter 11 and 13 will stay on your report for 7 years from the satisfaction date. Some creditors will not want to do business with you at all until the BK falls off the report. Many lenders will do business with you after 2 years. Some lenders will do business with you right away. It is possible to have the BK deleted though the credit repair process.

What are your alternatives? You can continue to pay your bills and try to get back on top of your finances. Of course you will have to continue to pay interest on all of your outstanding debt. The interest payments alone might be too much for you to keep up with and let's face it, nobody likes to pay interest. So continuing to pay down your debt only makes sense if know that you can make headway on your debts and actually get the balances paid down.

Consumer credit counseling, debt management and/or debt counseling; these alternatives are not recommended. These types of companies might negotiate with your lender for easier terms in which to pay off your debt. The problem is, your creditors might still report you as being late if you are only making partial payments. They might also report you as being past due which can ruin your credit score just as much as the late payments. Even worse, sometimes the debt management companies will collect your money while your accounts go from late to charged off. When the account has been charged off by the creditor, the debt settlement company will make an offer to pay off the creditor at a fraction of the original debt.

The BK will damage your credit but it is a much better alternative to debt consolidation, debt management or debt counseling. BK might also be a better option than continuing to try to pay down high interest rate credit cards. That is something that you will have to analyze yourself.

***One very important note about BK.

If you decide to file BK, there will be two things that will happen that will hurt your credit score. The first one is obvious; the BK will actually show up on your credit report and reduce your credit score. The second is a bit less obvious; all of your open and active accounts might be closed through the BK. Every account that has a balance will probably be included in the BK. Through the BK process, all of those accounts will be closed. Since only open and active accounts can contribute positive points towards your credit score, you will have to re-build your credit from scratch...with a BK.

If you can, hold on to a few of your open accounts through the BK. Pick your oldest accounts and pay them off completely. This might allow you to salvage some of your credit so you don't have to start all over again. I've seen people with 720 credit scores 12 months after the BK because they had a few open and active accounts that they held on to through the BK.

Warm Regards,

Jack B. Olson

TrueCredit 3-Bureau Credit Report & Credit Score