The media, newspapers, internet are full of information, but sadly, much of the information concerning credit is inaccurate. Let’s check out some common credit myths:
Credit Myth: “A co-signer is not responsible for the debt.” You will run into this one a great deal, and the consequences of this mistaken assumption can be devastating. In all actuality, a co-signer is every bit as responsible as the signer on the account. In recent years, as well, many mortgage applications were originated based on there being a co-signer, but in all actuality, the co-signer was the primary borrower. And, many times the person who thought they were getting just a co-signer, wound up not even being a part of the transaction in any way.
So the co-signer is quite definitely responsible, but tragically many of them will never realize this until they’re answering for it in court years later. Keep an eye out for educating people about that, because it’s a very pervasive myth! Help them to realize that on mortgage applications, they’re looked at virtually identically.
Credit Myth: “You’re not liable for (X) after getting a divorce.” This one is the catalyst for some of the stickiest, most contentious situations you can deal with as a credit repair specialist. If a judge in a divorce proceeding orders a spouse to pay a debt, many will assume that it’s no longer affected by credit. Well, the reality is that judicial orders don’t negate an existing contract. The contractual obligations are based on how they were initiated. The judicial order in a divorce decree could force one spouse to pay, versus another spouse, but that does not negate that spouse’s obligation to pay, based on the initial obligation.
Therefore, you have to be strongly advising in divorce situations to realize that you don’t let your emotions get involved with it. Sometimes you have to pay a little bit even though the other person is responsible, just to save your own credit. This is not an occasion to make a stand on principles, because you can pay for it dearly. It’s much better for a spouse to pay a couple of minimum payments on a credit card, or pay a car loan, than to ultimately have their credit ruined, and take a long time to be repaired. So remember, and help your clients remember, that a judge’s order does not negate the person’s responsibility to pay.
Piggybacking does not work anymore. It’s another myth. Ultimately, as we’ve discussed previously in this book, FCRA will wait, was supposed to change the way piggybacking rules were, which is based on authorized users, but they have since, decided to change that. Most lenders, at the writing of this book, still are not using FCRA 08, and it’s been out for a couple of years already.
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