How does Co-Signing a Loan Affect Your Credit?

How does Co-Signing a Loan Affect Your Credit?

How does co-signing a loan affect your credit?  Your son or daughter has come to you pleading with you to co-sign an automobile loan.  You want to help them get the new car, but do you understand how their loan will affect your credit.  When you co-sign a loan this will obligates you to the responsibility of paying back loan.  This loan will affect your ability to borrow money because it is an obligation that you are responsible for yourself.

If your son or daughter makes all of the payments on the loan on time, this will reflect positively on your credit report.   If your son or daughter misses on the payments of the loan, these missed payments will be posted to your credit report.  If the loan goes into default, the creditor can turn to you to make the remaining payments.

Here are some tips if you want to consider co-signing a loan;

  1. Only co-sign with a trustworthy person, usually a close family member wife, son, daughter, brother or sister.
  2. Setup times you will check your own credit report to monitor how the loan is paid back.
  3. Check the numbers.  Calculate the cost of borrowing the money, sometime there may be another solution to finance the money.
  4. Never co-sign a loan with someone you don’t know.
  5. Develop an exit strategy to remove you from the loan obligation.  This would include a refinance of the loan after the borrower situation improves.   It is difficult remove your name from loan obligations, so read all of the terms of the loan before signing.

Evaluate the benefits of the borrower getting the loan and co-signing the loan.  If you have co-signed a loan and you have concerns about how the co-signing a loan affected your credit.  You can contact me to get more information about co-signing a loan.  >>>>>Carl Blackstone Financial Empowerment Network