Good credit and employment are the foundation for positive outcomes in credit decisions. Employment demonstrates the ability to make payments. Good credit demonstrates the ability make those payments on time.
Nobody will argue that good credit and a Job are good for credit. They will only work, however, if they both belong to the same person.
Yes, that does seem obvious, but it is in no way uncommon for a consumer and a co-signer or guarantor to each have one and only one of these key factors. One consumer with good credit but no job cannot realistically co-sign for another consumer with a job but bad credit.
Good credit alone is absolutely worthless without assets to back up the credit. The saddest cases of this are the retired Grandparents co-signing for their beloved grandchildren. The Grandparent has good credit but is living on Social Security in a subsidized housing project. The Grandchild has a job but has serious problems managing money causing low credit scores.
Every month we get a few of these claims. They are essentially uncollectable. It isn’t like having 2 people; one with a basketball and the other with a net. It’s more like one with a broken tree and the other with a broken chain saw.
The Grandparent has no money to pay anything beyond life’s necessities. They don’t want their credit hurt because they have gone to great lengths to keep it high. I once had a Grandparent pay us ten dollars per months for eighteen years. He insisted he pay the bill and almost had it finished when he passed away.
He was the exception. Most Grandparents in his situation are upset but don’t feel they can pay anything.
So, does the Grandchild come in on a white horse to the rescue? Frankly, almost never.
The Grandchild already has very bad credit so there isn’t much to lose by being reported again. The employment is often marginal so the salary may be too small to garnish. Leaving the job to avoid that process is a common reaction.
The bottom line is a big, fat Zero. Our Client is not getting paid because one person lacks the money and the other lacks any desire to keep current bad credit from getting a bit worse.
This is a trap that is extremely easy to avoid. There is no higher math or complex mental agility required. All you need to know is that at least one person sighing your contract has BOTH a reasonable job and reasonable credit.
A reasonable job is defined by what the consumer is buying. The same is true for Credit scores. It takes more to buy a car than it does to buy a bicycle. Most industries have their standards and will share their information.
If you want to get paid make sure at least one consumer has both good credit and a good job.
Some things are not meant to be shared.