Credit Card Guide
Follow Us  twitter facebook You Tube Google+
Credit Cards > Credit Card News > Ask Erica > Can I Help My Daughter Rebuild Her Credit?


Can I Help My Daughter Rebuild Her Credit?

May 14, 2013
Ask Erica
email print comment

QDear Erica,

My daughter's life got messed up in her divorce. She co-signed some loans (totaling more than $15,000) with her dirt-bag of an ex-husband, so she can't get loans and credit cards she needs to get her life back in order. She didn't have a job when he left her and is still looking. I want to help her, but my wife has a problem with me just giving her money, so I was wondering the ways I could help her out credit-wise. Would you recommend I share a card with her in some way? Would my good credit help boost her bad credit? Would her bad credit affect mine in any way? – Raymond

AHi Raymond,

It would be so wonderful if we could go back in time to change not just our own past mistakes, but also those of our loved ones. Your daughter made a bad decision, yet how was she to know? She not only married the wrong man, but co-signed loans with him. Regrettable decisions, to be sure.Ask Erica

Most of the time, joint credit arrangements between spouses, whether for loans or credit cards, work out just fine. As long as both people treat the accounts well, all parties benefit. The bank reports the positive activity to the credit bureaus, and that activity is then recorded on the credit reports of each owner.

However, sometimes, all does not go according to plan. For example, the person who was expected to manage the account fails to do so and the loan goes delinquent. Does the lender care which rightful owner messed up? Not at all. As far as they're concerned, the amount owed was either paid or not paid, and each owner is 100 percent liable. The negative information will show up on and cause damage to both people's credit reports.

If the lender chooses to sue for the unpaid debt, it may drag one or both of the account owners to court. The divorce is irrelevant. If your daughter signed the contract, she's equally and permanently responsible for the money owed.

So how can you help your daughter now? You could co-sign a new loan or credit card for her. Her credit reports and scores would improve with positive use of that account.. And no, her credit history will not transfer to your credit reports, but the payment history on a co-signed card with you will.

Still, I don't recommend it. You would put your good name and finances on the line. As you can see from what your daughter has just been though, joint ownership is risky. By sharing an account with her, you lose control. I'm not implying that she will charge the card up and then not pay, but that it's a possibility — and a gamble. And if she were to do such a thing, you'd be held accountable, and your credit rating would sink if the situation really went south.

From what I see, you have three better options:

  1. Be the lender. While I'm not usually in favor of a parent acting like a bank, if you believe that your daughter will pay you back, you could offer her a loan so she could get back on her feet. I understand that your wife objects, but if your daughter were to secure the loan with something of value, it could give confidence that the money would be repaid.
  2. Be a benefactor. You could just gift your daughter a specific sum and be done with it. With a cash grant, she could repay the bad loans left by her ex, which will help her credit.
  3. Be the parent. Lastly, you can just say you're sorry, but she'll need to figure her own way out of this mess. You'll support her emotionally, but not financially.

The direction you choose ought to be based on your father-daughter relationship, your knowledge about her character — and, hopefully, a healthy amount of caution about sharing credit.

Got a question for Erica? Send her an email.




How to make the most of a new travel rewards card - Charge what is required to secure the one-time bonus and make payments on time, then you will be on your way to getting your plane tickets...

Debt settlement unlikely until you're behind on payments - That doesn't mean you can't try, but settlements have their downsides...

How hard inquiries hurt your credit score - Applying for a loan or credit card will trigger a hard inquiry, which will ding your score temporarily...



  If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the ‘Post to Facebook’ box selected, your comment will be published to your Facebook profile in addition to the space below.

Our editorial content is not sponsored by any bank or credit card issuer. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Secure SSL Technology
Secure SSL
Twitter Facebook You Tube Google+
About Us Privacy Policy Editorial Team Terms of Use
Contact Us California Privacy Rights Media Relations Site Map

Close X