Credit 101 what you don’t Learn in School

Good credit is a blessing and a curse. It’s a blessing if you need to borrow money for a student loan, a vehicle (not necessarily a new one), get a good insurance rating on that vehicle or to just begin to establish yourself for a time when you will want to buy a home. But then, it can be a curse if you let others use your good credit when they either don’t have any credit or have not paid their bills in a timely manner and have ruined their own credit.

As a former collection supervisor for a local bank, it was my duty to go to bankruptcy court when one of our customers had filed bankruptcy. One of the saddest hearings was for a young lady in college who had worked hard going to school full time and working a full-time job. She had established herself as a good customer. paid her bills on time and was on her way to being a responsible member of the community. But she let some of her so-called friends talk her into going to a local electronics store and putting stero equipment and a tv on credit in her name. Oh, they promised to give her the money for the payments each month and did so for a while. Then came the summer break and they went home and didn’t come back for the fall semester. They avoided her calls about the promised payments and somehow never got around to sending her the money. Finally, in despair, trying to keep up her own payments and those to the financial institutiion who had financed the “stuff”, she had to see an attorney about filing bankruptcy. I watched her tremble as the Bankruptcy Judge leaned over the podium where he sat and asked, “Where’s the STUFF?” She looked at him with tears in her eyes and told him what had happened. He just shook his head and asked if she thought she would make the same mistake again.

“No sir!” she replied fiercely. But for now, and for ten years from the discharge date of that Chapter 7, she would have to explain why she had to file bankruptcy to anyone she applied for credit with. It was a hard lesson and one she won’t soon forget.

If someone wants you to buy merchandise in your name because they can’t get it in their name, ask why they can’t. Then politely but firmly, say NO! They won’t like you but with friends like that, who needs enemies

Also, if you are asked by a family member or friend to be a co-borrower for someone, ask the same question. If they can’t get credit in their own name, why not? An assistant manager with a local grocery store agreed to be a co-signer for a drink route driver, just being a good person, never asking any questions. When called about a late payment on the loan, the customer said he was filing bankruptcy. When the word bankruptcy is said, the lender, collection agency, whoever, cannot call that person again. And, they are barred from calling the co-borrower if there is one. That’s the law, as unfortunate as it is. The only way that co-borrower will know the account he co-signed on was included in a bankruptcy is when he goes to apply for credit himself and is asked about the account and the bankrupcty. And no, the borrower doesn’t have to let him know. Again, say NO to being a co-borrower or co-signer unless you are willing to call each month to check on the account and be prepared to make the payments if the borrower doesn’t. That’ what it means to be a co-signer, co-borrower.