Car accident affects your credit score?

Question

My girlfriend just totalled her car and looking for a new one. Her parents are saying that they won't cosign because their credit rating will go down.

I said that I would have her on my insurance and that way it won't affect their insurance if she were to get in another accident. They are saying that because the loan will be in their name that an accident will affect it in a negitive way.

Is this true? I thought an accident would only help because it would show a paid off loan...

Thanks! :D Please show eveidence if you can.

Answer 1

If she had insurance that paid off the amount that was due on her old car, then no ones credit will be affected.  As long as she makes all the payments on the new car loan, it will not affect anyones credit.  Her being in an accident has no basis on affecting credit dealing with a new car loan

Answer 2

no, it will not effect it. unless she didn't have insurance and it was her fault then yeah.

Answer 3

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Answer 4

They are partially right.

When someone co-signs for a car loan they must be listed on the insurance for the car per the lenders agreement.

Being on the loan will affect their credit depending on how the loan is paid, if it's paid as agreed they get the benefit, if it's not they get the ding.

The other thing that will be affected is the cost of the insurance since that is based on both credit and driving records.

Answer 5

No it won't really affect her credit per se.

What it will affect if she's at fault is her insurance premiums.

Answer 6

The parents are correct on two counts. A loan that they co-sign would count as their liability and would be held against their credit rating. Also, if the daughter had an accident and there were a judgment against her, the parents' insurance company (if it covers the daughter) would have to pay damages, the cost of which would be passed on to the parents, and the parent's credit rating would take a severe hit.