How a Joint Account Can Damage Your Credit Score
There are plenty of reasons why some people choose to open a joint credit account. Married couples often make this decision for simplicity’s sake; they prefer to pay one statement each month rather than two or more. For individuals with poor credit, entering into a contract with another well-established person may work to improve their credit situation. With this said, unless payments are made regularly and on-time, joint accounts can damage both parties’ credit scores. For this reason, it’s often best to avoid joint credit accounts.
As a joint account holder, it’s easy to get tied up in the other person’s financial mishaps. In fact, creditors and debt collects may pursue either account holder for over-due payments. Since both individuals are legally responsible for the account, it’s often irrelevant which person the debt belongs to in cases of collections, demands, and payments. Sometimes, it makes more sense to assign multiple authorized users as opposed to entering into a joint contract. In this instance, another user may access the funds but cannot pay or manage the account. For couples and families, this may be the better solution.
One aspect of shared accounts often overlooked is the role of the co-signer. Although the co-signer signs the contract, the account remains under another person’s name. The person whose name is on the account is the one using the funds and paying the bills, so the co-signer must have faith that the person will do so responsibly. This is often the case for big loans in which the financial institution needs reassurance, especially for individuals who lack history or credibility.
At Trillium Auto Group, you do not have to worry about these matters as we guarantee your auto financing approval regardless of your current state — so there’s no need to involve a separate party or co-signer. Through the company’s 12 month credit plan, individuals can build their own credit scores and improve their history independently, without worrying about other account holders. The only thing sharable is the vehicle you drive away with!