Parents Put Utilities in My Name - Now I Have Debt

Reader Question: If you are about to turn 18 and you are already in debt because your parents have opened utilities in your name but you don't wish to get them in trouble what do you do?

You have a decision to make, and only you can make it. I can only explain how this will affect you in the long term. Let me start by saying you are not alone. I learned from a credit class I once took that this happens in this country. I wouldn't say it happens frequently, but it happens enough for it to be mentioned in a credit training course.

Here's what you need to know. If the utilities stay in your name, then you are going to have negative credit information on your credit report for several years. Most negative information (in this case, unpaid bills) will stay on your report for a period of seven years. And because your credit score is based on the information contained within your reports, this kind of thing can lower your credit score as well.

Bad credit has two primary implications. For one thing, it makes it hard to get financing from a lender. This includes car loans, student loans and home mortgages. The second way it hurts you has to do with interest. Because even if you do get financing with a bad credit score, the lender is going to charge you a higher interest rate on the loan (than they would charge a person with good credit). This, of course, increases the size of your loan payments.

If I were in your situation, I would get the utilities out of my name so I could have a chance to build good credit. You can establish a strong credit score by being financially responsible -- by paying all of your bills on time, keeping your debt levels low in relation to your income, etc. But if the utilities stay in your name, and delinquent payments are associated with that account, then it's going to drag your credit score down.

In case you missed the link above, here's an article worth reading:
Parents Abuse Kid's Good Credit

I hope that helps you gain some perspective on this issue. Good luck.