Credit Reports - Financial Links

Martynt74 · 6 Jul 2017 at 16:26

I've been asked to be a guarantor for a loan. I understand the implications that if the recipient doesn't pay then it falls onto me and I've accepted that.

The only thing that concerns me from doing a bit of reading is that it creates a financial link between us. Given that they have terrible credit (hence the need for me to stand in) what kind of impact might it have on my own ability to take out loans/mortgages in the future.

Before anyone comments, whilst it would be a lot cheaper for me to just get a loan at a decent interest rate on their behalf or loan them the money ourselves, my wife and i have decided it's better in their name as it may help their credit and it keeps the onus for paying on them directly rather than them paying us, which they might view as being easier to avoid the odd month.

Glanza · 6 Jul 2017 at 16:28

What have they done previously that has resulted in them having bad credit? Have they been forthcoming with details.

Martynt74 · 6 Jul 2017 at 16:34

Various defaulted payday loans and defaulted phone contracts.

We know the details or at least most of them (it's my stepson

)

Rotty · 6 Jul 2017 at 19:06

run away

lude1962 · 6 Jul 2017 at 19:13

dont do it

Broken Hope · 6 Jul 2017 at 19:27

They have a proven history of not paying what they owe and your solution is to borrow them more money and because it's in their name at a stupidly high APR to boot?

Jokester · 6 Jul 2017 at 19:28

Marvt74 said:
Various defaulted payday loans and defaulted phone contracts.

We know the details or at least most of them (it's my stepson )

Everyone deserves a second chance, but has he genuinely changed that you can trust him with what will ultimately be your money?

413x · 6 Jul 2017 at 19:49

Wouldn't do it!

Martynt74 · 6 Jul 2017 at 19:52

Well he's been paying payday loans for the last few months but has got stuck into the cycle of paying one off and then being short for the month so taking out another.

As i say, i'd be happy to just give him the money to pay it off so if it ultimately ends that way then i'm not in any different position. But i think this method at least tries to teach him more than just bailing him out.

bayo000 · 6 Jul 2017 at 20:34

Can you set yourself on one of those peer to peer loan website and get him to take a loan from you on there? Not sure whether they affect credit rating or not though. But even if he fails to pay it, it shouldn't affect yours at least.

ljop · 6 Jul 2017 at 20:37

bayo000 said:
Can you set yourself on one of those peer to peer loan website and get him to take a loan from you on there? Not sure whether they affect credit rating or not though. But even if he fails to pay it, it shouldn't affect yours at least.

From what I know, most peer to peer loans require good credit.

ljop · 6 Jul 2017 at 20:37

I probably would help, although, I would keep a close eye on things.

Martynt74 · 6 Jul 2017 at 20:39

I did try to apply for a loan on Zopa in his name but they have their own credit checks which he fails.

I think the way they work is to spread the investors money over multiple loans to reduce risk so not sure it would work as you suggest.