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Should I co-sign a credit card to repair my son’s awful Credit?

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Dear Penny,

My son has bad credit because he fell behind on bills after losing his job. He had two accounts closed but paid off the balances. Now he can’t get accepted for any sort of credit.

He’s 26 now and is working again while living at home with me. But since he doesn’t have credit, I’m worried that he’ll never be able to get established on his own.

I’m thinking of offering to co-sign a credit card for him so that he can rebuild his credit. What do you think, Penny? Is this a good idea?

-Meddling Mom?

Dear M.,

I suppose that somewhere out there, someone has co-signed and doesn’t regret it. But they’ve never written to me.

Instead, I hear from people like the woman whose credit score fell 100 points after she co-signed a friend’s car loan and the car was repossessed, or the mother who worries that co-signing her daughter’s student loan killed her retirement plans. Those are just the letters I’ve published. Every time I answer a question on co-signing, my inbox fills up with co-signing regrets.

Banks make tons of money by issuing people credit cards and charging them exorbitant interest rates. When a bank looks at someone’s credit profile and rejects them, they’re saying: “Nah. We’ll pass on the potential to make money because it’s too big of a risk.” That’s a pretty good reason not to jeopardize your personal credit or finances, either.

But you may not have a choice on this one. Most major credit card companies no longer allow co-signers because the risk of issuing cards to people who can’t qualify on their own record isn’t worth it to them. Should you ignore my advice, you may have better luck with a community bank or credit union.

The best advice I can offer your son and anyone else who’s trying to rebuild credit is to open a secured credit card. You put down a refundable deposit that becomes your line of credit. Because there’s little risk to the issuer, it’s easy to get approved for one. Usually, if you make your payments on time for about a year, you can get approved for a regular credit card.

But here’s what I’m curious about: Has your son even asked you for help? Your signature certainly implies otherwise.

From what you’ve told me, I’m concerned that your son lacks the drive to rebuild his credit. If he isn’t motivated to fix his finances, what else isn’t he motivated to do?

I suspect that’s the heart of your concern. Are you worried that your son will still be a boomerang kid when he’s 36 or 46?

I wish I knew more about your son’s work and living situation. It’s great that he’s working again, but is he working toward anything? If he’s saving money and contributing to household expenses, that’s a lot different than if he spends his whole paycheck on gaming equipment and UberEats.

The long-overdue discussion you need to have with your son is about much more than credit. You’re no doubt cutting him a break by allowing him to live with you. Does your generosity have a shelf life?

Set some expectations. That doesn’t mean you have to give him a firm moveout date, but you should have some conditions for continuing this arrangement. Many people won’t make changes when they feel too comfortable.

But if you make it clear that you expect him to help out with bills and that you’re not going to allow him to live with you forever, perhaps you’ll inspire him to start thinking longer-term.

Credit can certainly be part of this conversation. When your son leaves the nest again, he’ll find life a lot easier if he’s improved his credit.

Ultimately, though, he’ll need to be the one to make this happen. It’s time for him to act like the adult that he is.

If your son isn’t willing to make any changes, you’ll have to put more pressure on him. That may mean setting a hard deadline for moving out and sticking to it. This will be uncomfortable for both of you.

Resist the urge to play savior here. If your son doesn’t clean up his credit, maybe that means he’ll pay a huge security deposit to move into an apartment or have to live with roommates for a while. Maybe he’ll learn that life without credit is tough and finally make changes.

If you make life too easy for him, your fears will come true and he’ll never re-establish himself.

Some people insist on learning things the hard way. Hopefully, your son isn’t one of them.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

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New program to help Black-owned online businesses | Technology

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ATLANTA _ Many Black entrepreneurs struggle to get bank loans and professional help to launch new businesses. A new program aims to remove those stumbling blocks.

An Atlanta nonprofit and another business have committed $150 million to the 1 Million Black Businesses effort, which will make loans and provide financial and business advice to Black-owned startups and established small businesses. Atlanta-based nonprofit Operation Hope, which helps consumers improve credit scores, is kicking in $20 million, and Shopify, the online e-commerce is adding another $130 million for the loans and website-hosting services.

Other services firms providing expertise or help include Aprio, an Atlanta-based accounting firm, and First Horizon Bank.

It’s a package of products that many Black entrepreneurs couldn’t get through a bank or credit union, said John Hope Bryant, CEO of Operation Hope.

“A bank won’t lend you money unless you can prove that you don’t need it,” Bryant said. “That’s especially true with minority-owned small businesses.”

Small businesses with Black owners were half as likely to obtain business loans as whites, according to a Federal Reserve survey published earlier this year.

The initiative is the latest effort to help Black consumers and businesses enter the financial mainstream. Earlier this month, a group that includes rapper Killer Mike opened a digital bank aimed at Black and Latino consumers.

Banks and credit unions have tried for years to help Black consumers open checking and savings accounts. The efforts helped, as the number of U.S. households without bank accounts fell to 5.4% in 2019 from 6.5% in 2017, the Federal Deposit Insurance Corp. said Monday.

Consumers who own checking and savings accounts typically have access loans with better rates and a wider variety of financial services.

The federal government’s $660 billion loan initiative for businesses hit by COVID-19, the Paycheck Protection Program, also helped few Black-owned businesses, Bryant said. PPP loans were based on a company’s number of employees and its rent obligations. many Black-owned small businesses typically didn’t have enough workers to qualify and are based out of the owner’s residence.

Bryant said a bad credit history may not prevent applicants from receiving a loan.

He hopes more companies will contribute services such as insurance advice or software typically available only to well-established businesses.

Bryant noted that 1MBB is not a charitable organization, as participating companies like Shopify will likely get a pipeline of new business customers through the program.

“This is not pure philanthropy,” he said. “Shopify believes that Black-owned businesses are good businesses if they’re properly supported.”

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This Week’s Top Car Deals & Analysis – October 30, 2020

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The final days of October offer a chance to take advantage of outstanding model year-end deals. Most offers end November 2, which means there isn’t much time left to enjoy this month’s best lease deals and deepest new car discounts. We even found incentives that can help those with bad credit buy a new or used car.

2021 car deals. Interestingly, 2021 new car incentives are showing some surprises. For example, Audi is already offering up to $12,000 in savings when leasing the 2021 e-tron all-electric crossover. We even learned that the new Genesis GV80 SUV will debut with a $589/month lease deal plus special financing rates.

Believe it or not, the 2021 Hyundai Veloster N could prove to be a great value despite a nearly $4,700 price increase compared to the previous year. That’s because our analysis finds that better incentives can make it just $10/month more expensive to lease than the 2020 model. Talk about getting more for your money.

Why are small cars bad to lease? Even though smaller cars typically come with lower price tags, that isn’t always the case when leasing. A mix of lower discounts, worse residual values, and smaller discounts can actually make a Nissan Altima cheaper than a Versa despite having an almost $10,000 difference in MSRP.

Shorter-mileage leases. More brands are offering shorter mileage allowances on car leases. Although this is typically used to offer consumers more flexibility, we’ve found cases in which you can end up getting less for your money. If you don’t read all the fine print, this could make comparison-shopping difficult.

Bad credit car deals. If you have subprime credit, you may find it harder to get financed. However, some manufacturers are offering special incentives to help make cars & trucks more affordable. For example, Chevy is offering $2,000 in down payment assistance plus 9.9% APR for 72 months on the 2020 Trax.

$0 down leases. If you’re adamant about now putting down any money on a lease, you’ll love Sign & Drive leases. In addition to requiring no money down, $0 down lease deals can cover your first month’s payment. Even hot sellers like the Honda CR-V Hybrid offer $0 down and as little as $330/month on a lease.

The high cost of safety? Even though most major automakers are offering more safety features than ever before, our analysis finds that the highest IIHS safety ratings still require costly options in 2020. That’s starting to change, but the cost of buying a car with the most bragging rights is still very high.

Disaster relief. Those affected by some of this year’s natural disasters should be aware that automakers are offering assistance. California wildfire assistance programs like Ford Employee Pricing can save thousands when replacing a car. Similarly, a 2020 hurricane relief program from GM offers $1,000 in savings.

Spooky loan situations. There are some scary scenarios you can avoid when getting a car loan. However, boosting your credit score is possible with some determination because negative items on your credit report fall off after 7 years. Our network of dealers is specially equipped to help those with bad credit.

Upcoming vehicles. Genesis finally revealed the new GV70, a small luxury crossover based on the highly-rated G70 sedan. Whether it’s a redesigned car, truck, or SUV, odds are you’ll find it on our Previews page. That said, as we reported last week, discounts ahead of a redesign can result in substantial savings.

This Month’s Cheapest Lease Deals »



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Why bad credit doesn’t have to be a life sentence

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JACKSONVILLE, Fla. – No matter if they’re bad or good, credit scores affect everyone’s lives.

Still, for many people, by the time they’ve learned the importance of having good credit, it may be too late.

“If you’ve had late payments, it would take 24 months of on-time payments to rectify the situation,” Jax Federal Credit Union Interim President Mary Svoboda said.

Svoboda said paying someone who claims they can fix your credit quickly is a waste of money.

“It can cost you several hundred dollars, and you can do it yourself,” she said.

Svoboda says those quick-fix businesses check your credit report for discrepancies and then dispute them. She explains how you can do it on your own instead.

“Check your credit report,” she said. “If there is something, it’s very easy to dispute it directly with the lender or through the online process with the credit bureaus. So you don’t need to pay for that.”

If there is any silver lining from the coronavirus pandemic, it is that all three major credit bureaus — Experian, Equifax, and Transunion — allow anyone to check their credit every week without any penalties. Before, you could only do that three times a year.

Svoboda added that Experian now offers a credit boosting service that is free and can help boost your score.

“The credit report would be linked up to your bank account and through your bank account they could see you have regular deposits and you pay your utility bill and your mobile bill on time, things like that,” she said.

Svoboda said some of the most common pitfalls she sees when it comes to credit is people have too many credit cards. She said that should be avoided when you start building credit.

“Sometimes it’s horrible, you see people that have 20 or 30 credit cards, so that is not a good idea,” she said.

That should all be avoided when you start building credit.

If you want to build credit but need some help living within your means, Svoboda recommends getting what’s called a secured credit card. It’s like a debit card in that you can only spend what’s in your account. But unlike a debit card, a secured credit card builds credit.

What if you’re taking steps to fix your credit but can’t wait and need a loan now?

“Right now, what I would encourage someone to do is if you don’t really have any credit, bring me your bank statements and show me, ‘Look at this. I have made a $600 rent payment for the first of the month for a year.’ I’ll say, ‘Let’s do this loan,’” Svoboda said.

While you’re rebuilding your credit score, Svoboda says you should care about it, make it important, and check it. Because a bad credit score doesn’t have to be a life sentence.

We’d like to hear from you

Copyright 2020 by WJXT News4Jax – All rights reserved.

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