Most financial experts will tell you that your debts will follow you to the grave. But, that’s the short answer. You should go through your financial situation with a fine tooth comb. Your debt could pass over to your children.
Is your child co-signed with your car loan, credit card and/ or any personal loans? The reason for having your child as co-signer might have been because your credit score was low or he/she needed help in procuring the loan. These credit loans would be in your child’s name too.
A lender agency will only agree to remove a co-signee name if you improve your credit score. However, if you’re finding it is difficult to improve your credit score, shift your focus to paying the debt off.
Mistakes do happen and it is possible that your son/daughter takes over the loan because the parent and child have the same name. Ideally, it should be an easy process for your child to get his/her name off the credit hook, but creditors are quite aggressive. It won’t be an easy path for your child to get his/her name off the credit list. Lenders and collection agencies will use borderline illegal methods to keep your child’s name on their credit list. In short, it won’t be easy for them.
Firstly, make sure that there is no clash of names or any other details on the document.Items like date of birth and others need to be correct. If you find any mistake, get in touch with the lender agency and have it changed.
Are you planning on passing down your property, house or car to your children? If there is any loan pending, that too will pass down to them. Ensure you pay it off as soon possible. Once again, planning and budgeting will be of great help.
Unauthorized use of your Child’s name
You may not practice this, but it is nevertheless done by a lot of parents. Parents misuse the child’s name and use their good credit to get a loan or line of credit. It’s worse if the child is a minor. Basically, the child has no idea that the parent has opened a credit account in his/her name.
The only thing to be done in this case is pay off the loan as soon as possible. Use methods like planning and budgeting to ensure you have enough funds to pay these off.
Check your Finances
Take a look at your credit report. It gives you a detailed account of your credit history and the debt you owe. You can check each one of the accounts and the names of the owners.
If you have used your child’s name to open a credit line, then that information won’t be on your credit report, it will be on his/her credit report. Go through all the financial documents you have collected over the years and run through them. The aim is to find any possible credit account in their name that may pass down to them.
What you are trying to achieve, is something that many parents don’t bother about, so kudos to you. If you need any help, don’t hesitate to get in touch with 4 Pillars Debt Consultants.