Amigo Loans Question

Late_To_Bed

One of my friends has a terrible credit rating.

He behaved irresponsibly when he was younger and abused his credit cards terribly.

He now finds it impossible to borrow money.

I trust him and I am prepared to be the guarantor for an Amigo loan.

My question is, after successfully clearing his loan at the end of the agreement, will it improve his credit rating?

dealer_wins

No.

It will also cost you at least 90% of the amount of his loan when he defaults after the first couple of payments, and a complete breakdown of your friendship thereafter!!

stephane_2

And if he fails to repay you'll end up paying a huge amount of interest....

McClane54

NO STAY AWAY MATE

You were warned, keep your friendship

[Deleted User]

If you trust him that much, get a loan in your name and get him to pay you back. That way, he will pay less in interest and you will pay less if he defaults.

To build a credit rating, he should get a credit card aimed at bad credit individuals and see if he can manage that properly.

DCFC79

Read up on the pros and coins of what a guarantor entails.

spacey2012

You Know what he "has told you"
The loan company can see the truth with one click.
They are experts in lending money.
They know he wont pay it back once he has had what he wants the money for.
So they need a mug with "something to lose" to guarantee to pay it for him.

Thats where you step in.

Apples2

There's a theme developing!

Late_To_Bed

Apples2 wrote: »

There's a theme developing!

Ha!

Quoted for truth.

I trust him 100% and I owe him a big favour or two because he's helped me out over something completely unrelated in the past.

I was only offering to do this because he wants to repair his credit rating.

He doesn't actually need a loan atm but will do so in the not too distant future, so we just thinking about this as a way of improving his score.

Hadn't considered a bad credit risk credit card.

I'll put that option to him.

Thanks for the replies.

[Deleted User]

Late_To_Bed wrote: »

I owe him a big favour or two...

He doesn't actually need a loan atm but will do so in the not too distant future...

Is this not the opening scenes of The Godfather?

Tixy

It won't improve his credit rating - if a payment is missed it would affect yours.

For credit building have a look at this article about subprime cards, secured cards and last resort creditbuilder prepaid cards - Credit Cards for Bad Credit: Poor credit guide - Money Saving Expert