Hi everyone, I have a question: I am finally dealing with my w/CC debt. I have about $13,000 on 2 (of my 4) CCs, and both are maxed & at 29% interest due to my stupidity. I'm making just above the min. payments and getting nowhere fast. My mother (bless her soul) said she would cosign for me or get a loan from her credit union on her own at around 9% interest, and I would have to make the payments. They would be just under $400 for around 4 years, which is about what I'm paying now, except it won't take me NEAR as long to pay it off. So my questions are: 1) is this a good idea? and 2) will this even help my credit rating in a few years with steady payments, or is having the same debt amount simply in a different style of debt a futile attempt? thanks for any help!
If your mother is willing and you can make the payments it's an excellent idea. Just don't get Mom jammed up. Why on earth are you worried about a credit rating when you're paying 29% and have the opportunity to get it reduces to 9%? Do what makes sense and get out of debt on reasonable terms.
She is safer getting her own loan directly, and paying off your debt in exchange for you signing a promissory note agreeing to pay her back on terms that cover the payments, rather than cosigning your loan. What would she do if you were unable to make several payments, such as due to loss of job, medical emergency, death, etc? Would she be able to continue making payments? Whether it is your loan cosigned by her, or her loan, she would have to. Your credit is secondary at this point.
I agree that your scores are not your biggest worry at this point. But as someone pointed out, you don't want to leave her hanging. If she cosigns, make sure you let her know ahead of time if you can't make a payment, so she can make it before it's past due. Getting out of debt is your biggest concern right now with the rates you're paying. If you don't mess up again, your scores WILL go back up. Don't close your credit card accounts, just don't use them. If you have the discipline to use them for a tank or two of gas every few months and pay it off the next month, it will help.
