In my 30 years of experience, I’ve observed that 75% of Pakistanis face credit challenges due to well-intentioned but risky actions. For instance, many of us arrive in a new country like the USA and need credit to make essential purchases like cars, homes, or even basic utilities. Without an established credit history, we often turn to friends or family members for help.
The scenario typically involves adding them as authorized users or cosigning applications. Initially, everyone is pleased with the arrangement, but as life gets busier, it’s easy to forget that someone else is handling the account responsibly. Then, when you’re ready to make significant financial moves, like buying a car or a home, you discover that your credit report has late payments or high balances due to their usage.
Late payments can linger on your report for 7 years, and sometimes 3 years in specific cases. Suddenly, you find yourself in a difficult situation, and what was once a harmonious relationship may turn sour.
My first piece of advice to everyone is a simple yet crucial one: Never cosign or add someone as an authorized user, even family members or your own children, unless you’re absolutely certain of their responsibility. There are alternative ways for them to start building their credit, and I’ll share those in my next blog. Stay tuned for more valuable insights.