Credit debt issues: How can I help to improve someones credit issues?

Question

I am trying to help out a family member resolve credit issues. Is there anything out there that can help her credit situation? Her score is 550 and she has about 8500. in credit card debt. She cannot get another card because of bad credit history. Any answers?

Answer 1

Applying for cards at this point makes the problem worse.  You have the option of trying to get a better rate from one of her existing cards - but do not try to negotiate a buy-down of the balance, it could hurt her credit even further.  Give the existing card companies a call and tell them you are trying to consolidate all her balances on one card at a lower rate.

A second thing you can do, depending on your relationship, is add her as a joint card holder on one of your accounts, if you have one that doesn't have a big balance.  When the card arrives with her name on it, destroy it.  In a few months, the account's payment history will appear on your relative's credit report.  This is risky, since you want to make sure that she doesn't call your card company and request another card the next time she's in a bind.  Even if she fully intends to pay it back, she can strain your relationship.

A third possibility is adding her as an authorized user.  Again destroy the card when it arrives.  Authorized users may or may not be added to credit histories, contact your card company to be sure.    

Answer 2

First of all, ask yourself why you're trying to help someone with a 550 credit score and 8500 in debt build their credit score in order to get ANOTHER credit card...

Answer 3

Fork up $8500 bucks and pay her bills for her, cut up the credit cards and let her know that if she doesn't have the cash for something, she doesn't need it.  

Answer 4

You help her by sitting down and explaining how to budget purchases while paying off credit card debt.

If she has a job, she needs to make paying off the debt her first priority, not trying to find a way to incur even more debt with another card.

If she doesn't have a job, or make enough money to pay off her debt now, what will getting another card do except dig her in deeper?

Don't be an enabler for this kind of thing. You aren't really doing her any favors.

Answer 5

mojo, I suggest you try calling a local credit restoration company. http://www.tipstoimprovecredit.com They should have some programs for you.

Answer 6

Request copies of her credit report from each of the three CRAs (credit reporting agencies). You can get a free report from each of them once a year, so you don't need to pay any kind of service to do it for you.

The website to get the free annual reports is http://www.annualcreditreport.com - there are lots of paid services but you don't need them.

Check the reports for any errors. Debts that have been paid but are still showing on the report, outstanding issues that have been closed, things like that. If there are any errors, the CRA has to remove them if you make a written request and they can't provide proof that they are accurate.

If there are errors on the reports, getting them fixed can improve her score without doing anything else.

Make sure she makes all her payments on time. Late payments can cause her credit score to drop. If she has had late payments and starts making them on time consistently, just be aware it can take a few months for the improvement to affect her score.

If she pays off a credit card, don't close the account. Cut up the card so she can't use it, but keep the account open. Your credit score is partially based on how much total debt you have outstanding compared to the total credit available. Closing a cleared account can cause this ratio to increase, and can actually lower your credit score in some cases.