It's Not Necessary

Corrina is calling because her son and his wife inherited some money. They want to buy a house, but they don't have good credit. He asked Corrina to co-sign a credit card for him. Should she do it?

QUESTION: Corrina in Los Angeles is calling because her son and his wife inherited some money. They want to buy a house, but they don’t have good credit. Her son has two repossessions, but it’s been a couple of years since it happened. He asked Corrina to co-sign a credit card for him. Should she do it? Dave has another idea.

ANSWER: I think the goal of getting a home is a good goal. We need to go down into the situation and figure out what caused the bad credit. If he has two repossessions that the deficit balance is still outstanding on, he’s got to go clean those up before anything starts moving. If he still owes those banks money, he’s got to go settle that debt.

If he will not borrow any more money and if all of his accounts are closed and paid, very soon his FICO score will be zero. If you go get him a credit card, you’re going to mess that up because you do want either a very high credit score or a zero credit score in order to get a mortgage. Some mortgage companies are so stupid the only thing they know how to do is high credit score. Lots of mortgage companies know how to get you a loan with zero credit score. If you’ve paid your landlord early or on time for two years and you can get them to sign off on that, you’ve got no bad credit outstanding, no slow pays for the last two years, you have a good strong job and had that for two years, a good down payment, and you have a zero credit score, you can qualify for a traditional mortgage. I think if your son knew that information, he wouldn’t be asking his mother to get a credit card for him.

My answer to your question, should you get a credit card in order to help them get a house, is first off, it’s not necessary. Second, I think it would be a really stupid idea because you’re going to get yourself in a mess with your son. Third, it’s not necessary. Fourth, it’s not necessary. The best way for him to get a house is to get his act together, start paying his bills on time, clean up the old bad debt, and then he’ll be in a position to get a home very quickly with a zero credit score.