Dear Liz: My 33 year old son has terrible credit scores. If I added her name to my credit card, would it have a positive effect on her score without any negative ramifications for mine? Could one of his creditors sue me?
Reply: Adding someone to your credit card as an authorized user can have a positive effect on their credit rating without negatively affecting yours or forcing you to pay their other debts. You would be responsible for any debt incurred by your Authorized User on the Card.
In the case of your son, however, being added as an authorized user probably won’t help much.
When a person has fallen behind on their bills, the effect on their grades depends on three main factors: recency (what date of late payment?), Severity (how late are they – 30 days , 60 days, 90 days or more?) And the frequency (how many accounts are overdue?).
A skipped payment can reduce good scores by 100 points or more, but will not result in “horrible” credit. Really bad credit usually requires someone to be late on a number of accounts in the recent past. The fact that you are worried about his creditors indicates that he may not have solved his financial problems enough to start rebuilding his credit.
What he needs to do now depends on his situation.
If he still has a job, he may be able to work out a payment plan or settle debts with collectors. If his income has declined or is unable to pay, he may need to consider bankruptcy.
Once his past debts are settled – whether paid, settled, or legally wiped out – he can take steps to improve his credit, one of which could include adding it to your card. A credit builder loan, offered by many credit unions, could also help, as could a secured credit card, which requires a deposit.
However, it is crucial that he can make all of his payments on time. If it still falls behind, it will compensate for the progress made.
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.