It's old wisdom that money can wreck friendships. But, even if you never borrow money from friends or family, other types of carelessness can do damage to their credit scores. With credit scores used for everything from determining how much you pay for car insurance to whether you can afford a home, it pays to be careful when it might affect someone's score. A few ways that your actions can send someone else's score down the tubes:
1. Unreturned library books.
Visited the library with a friend and took a book or some movies out on their card? Make sure that you get those back by the due date or pay any fines if you are late. Libraries send unpaid fines to collections, which can get your friend a negative mark on his or her credit report.
2. Getting tickets in a friend's car.
No matter how embarrassed you are, if you get a parking ticket in a friend's car, own up to it and pay up. It won't just go away. And, since a parking ticket is tied to your friend's car tag and identity, the black mark will wind up on their credit report and not your own. If you lend out your own car to friends on occasion, you should check your credit reports for unpaid parking tickets, as well. The negative mark can be enough to keep you from getting a mortgage or a credit card with the most favorable rates.
3. Failing to repay a co-signed loan.
It's not uncommon for people who don't have enough credit history of their own to get a family member to co-sign on a loan. But, that contract means that the co-signer is responsible for the debt if the primary borrower fails to pay. A friend or family member who needs a good credit score may wind up paying the monthly payment out of pocket to avoid the bad marks. If the loan is written off as uncollectible, that will mar their credit for years.
4. Charging up high debts as an authorized user on someone else's card.
High utilization of credit lines can have a significant effect on your credit score. In general, it's a good idea to keep utilization on a card under 30%. If someone is trying to improve their score, they should keep their utilization under 10%. If you make big purchases on a friend's credit card account and carry a balance, you can push their utilization high enough to hurt.When a friend or family member extends these sorts of assistance to you, be sure to treat their trust with respect. By showing that you can be trusted, you can make your relationships stronger while building your own credit and financial future.
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