Team Clark is adamant that we will never write content influenced by or paid for by an advertiser. To support our work, we do make money from some links to companies and deals on our site. Learn more about our guarantee here.
Welcome to Ask Clark, a column designed to answer your financial questions, by money expert Clark Howard.
Rick from Texas: “We want to sell my brother our truck, but we want to build his credit. Can I co-sign a loan for him to buy our truck from us?”
Clark says: “This is not how I want you to help your brother to build credit. The reason is that the problems I hear on co-sign loans among family and friends are so, so ugly.”
“Anytime you co-sign a loan for a family member or friend, if that family member or friend gets in a rough patch and can’t make the payment, you’re on the hook for that,” Clark says. “If they go late with a payment and you don’t know, your credit is trashed along with their credit.”
Instead of risking your credit to help someone else build theirs, here’s Clark’s suggestion:
“If you want to sell your brother your truck, and you can afford it, have your brother just pay you monthly for the truck, where the note stays with you.”
As for building credit the right way, Clark says, “There are much better ways using the credit card programs for people who need to build credit or repair credit.”
A secured credit card works like a debit card: It lets you spend only the amount you’ve deposited into an account with the card issuer. Not only does a secured card protect you from going into debt, but it actually helps build your credit with each purchase.
We like the Chime Credit Builder and the Petal Card.
Clark says, “If you want to help your brother, another way to do it is to make your brother an authorized user on one of your credit cards. But don’t give your brother possession of the card, and that will help your brother with his credit standing.”
Learn more about being an authorized user on a credit card.
To hear Clark’s full take on this question, listen to the segment:
Do you have a question for Clark? Use this form to ask him! And remember that you can listen to the Clark Howard Podcast at any time here.
If you have a question but don’t want to go on the air, contact Clark’s Consumer Action Center for free money help.
This post was last modified on August 25, 2021 8:53 am
Money expert Clark Howard says you’re not alone if you’ve experienced “shell shock” at how…
Clark Howard's "never check luggage on a flight" policy is extreme -- especially for a…
Visible currently offers one of the best deals on unlimited service with cell phone plans…
When it comes to protecting your finances, money expert Clark Howard is all in on…
For years, the task of redeeming loyalty points or miles on an airline's website has…
Your company gives you exciting news. Either you'll be allowed to drive a company car…