Q: I have very low credit due to some unnamed student loans that were taken out when I was a teenager. I can’t get a loan, even for $2,000. I have a one-year-old, and I am trying to buy a car. I do not want to ask my dad to co-sign for me, because I’ve never asked him for anything like this. Can I consolidate my debt and still get a loan without my dad?
El Paso, TX
A: I’ll start with the question you didn’t ask. Should you get a co-signer for your car loan?
I know you didn’t ask me that question, but I’d wager a bet that, later, I would get a note from your dad asking me what he could do to get out from under a car loan he signed for his daughter. I would have told him to never, ever, co-sign for anybody. Unless…
I would have told him unless he was flushed with cash, don’t co-sign. I would have explained to him that co-signing means it’s his loan too. He would not be a backup borrower. He’d be saying to the lender should the primary borrower miss even the first payment, “Come get me; I’m good for the loan.” Oh, and I’d have told him that if the primary borrower pays the loan late, such information is reported on his credit files, which will negatively impact his credit history.
So, don’t put your father in that position. You are right to feel hesitant about asking him for this enormous favor. Don’t do it.
I know transportation is important. Do what you can to get around until you can save up enough to buy a hoopty or until you have the financial standing to either buy a better car with cash or get a loan on your own.
I may be able to help you with improving your credit scores, which will help you qualify for a loan.
My clue is that you said there are student loans out there you don’t know anything about. Now, there could be two reasons for this. The first reason is someone took out the loans in your name when you were a teenager. Is that why you don’t have a clue about them? If so, that’s called identity theft, Identity theft is when someone is using your personal information to obtain credit in your name. If you are a victim of identity theft, then you are not responsible for those loans.
To clear this up, you will need to contact the lenders to let them know you were a minor and did not take out these loans. Ask for verification that you signed for the loans. By law, the lenders have to show you proof you took out the loans. After contacting the lenders, file a police report. Send a copy of that report to the lenders. Go to the Federal Trade Commission’s “Fighting Back against Identity Theft” page to get more information on the steps to take if you are a victim of identity theft.
Now, the second reason you may not know about the student loans is you just didn’t pay attention to documents you were signing when you applied to college. It’s possible you didn’t realize you were getting loans. This may sound crazy to some people, but I’ve seen it happen. A young person just out of high school gets into college and just signs whatever is put before him or her, just grateful to be going to school.
Or, maybe you took out so many loans you didn’t keep track of them all. That happens too.
You can search the National Student Loan Data System to see if there is any information on federal loans you took out. This is a central database with information from schools, the Department of Education and other loan organizations.
If you attended college, contact the school’s financial aid department for help in sorting out the student loans.
If you indeed took out these loans, please don’t neglect to get this all straightened out. Eventually, the lender will track you down, and your wages could be garnisheed. Then you will have a worse problem than not being able to get a car loan. You especially don’t want this to happen if you never signed for these loans.