Do Timeshares Affect Your Credit?

Timeshares allow you to own a portion of a property to use for vacation purposes. The properties are typically condominiums in resort areas. You purchase a time-share in one-week increments. Most of the companies that finance timeshares report your payment history to credit bureaus. If you fall behind on your loan or maintenance payments, it can have a serious effect on your credit.

Since you are only buying a small percentage of the property, in theory, the cost should be very reasonable. Unfortunately, most timeshare properties turn out to be quite expensive. In addition to high interest rates, you can have high maintenance fees that go up every year. If you get far enough behind, the finance company can start foreclosure proceedings on your timeshare. If you do not make up the payments and the foreclosure is completed, the finance company can file a court action and obtain a judgment.

If the finance company obtains a judgment it can garnish your paycheck or go after your assets. It can even record a lien against your primary residence. Timeshares can destroy your credit. Judgments and foreclosures remain on your credit report for seven years. Late payments on timeshares have the same effect as late mortgage payments. Poor credit can prevent you from financing your home or purchasing an automobile.

There are several alternatives to purchasing a timeshare property. If you check your local newspaper's travel section, you can usually find excellent vacation packages. These often offer heavy discounts, and many include airfare. The discounted packages can cost considerably less than a timeshare.

High-pressure salespeople often sell timeshares at seminars. The timeshare company invites you to a free meal and presents you with an offer that is only good for the day of the seminar. The presenters do not show you a copy of the agreement until you purchase the property. You are legally entitled to a rescission period that allows you to cancel your purchase. This varies by state and can be as little as three days. Most people do not read the fine print in time to cancel.