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maddkatz

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Need advise on improving wife's credit report regarding an auto loan written off.
Me and my wife are looking to buy a home and we're trying to fix her past credit history in order to improve our chances at getting a home loan. The issue is on her credit report there is a write off for a vehicle she cosigned with her mother on back in 2008. The status says "Transfered, closed. $4,051 written off," according to her mother this loan was declared in a bankruptcy she filed. If this is true should the written off amount still appear on my wife's credit report? Also if it hasn't been claimed on the bankruptcy should we ask my wife's mother to declare it? Currently my wife's credit score is a 650 and mine is a 770 if this would make a difference. Any advise would definitely be helpful since I'm really not sure how to go forward here, thanks!

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Cosigning is a bad idea.

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When your wife cosigned the loan for her mother, she was, in reality, telling the finance company that she would be responsible for the loan if her mother failed to pay as agreed.  That is why it is on her credit report as well as her mother's.  And it will remain on both credit reports until 7 years past the day of last activity (payment).  A bankruptcy does not erase a debt but it does remain on a credit report for 10 years.

The written off amount is going to remain for 7 years on your wife's credit report because she said she'd be responsible.  Fortunately, the finance company did not come after her for the money, which they could have done.  This is why cosigning a loan is not a wise idea, because you are backing up the other person's debt.  If they are not able to get the loan on their own merits, how can anyone be sure they would not be left "holding the bag" after cosigning a loan?  Most cosigners end up in that situation.

Time may be the only real cure for this issue and during this time your wife could get a secured credit card that may later become a "regular" credit card.  Give that a try to help improve her credit rating. And utilize the "credit simulator" tool on this site to see other ways she may be able to improve her credit rating.  With the simulator, you can play games with finances without suffering the consequences of making an error in real life.

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Thanks for the response!

Yeah I really wish she hadn't cosigned on the vehicle, she definately learned her lesson there. Would it be worth it to try and pay off the written off amount or let it stay as it is? She has gotten a secured credit card and has had it for 3-4 months, she's kept the balance under 30% of the total and hasn't been late on a payment so that's helped, I'm just trying to figure out if it'd be better to try and pay off the written off amount or not. 

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jwsister

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I don't know if paying the written off amount will help or not.  You could contact the company to see if wife could get a "pay for delete" so that, if the amount were paid, the negative would be removed from her credit report.  I haven't seen it done, personally, so can't guarantee results.  Make sure the proposal for the pay for delete and their response is in writing because that's the only proof you'd have of the "deal." 

But, many credit grantors have insurance on the high risk accounts so they don't lose a lot in case of default.  That may be why there was no vigorous collection activity on the car.

Have wife try keeping her credit card usage between 15 and 25% for the best report.  Sounds like she's making a good start to improving her credit!   

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