Why You Should Refuse To Cosign A Loan

Why You Should Refuse To Cosign A Loan

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Your adult offspring may come to you asking you to co-sign their loan. As a parent, you want to do what you can to help your children succeed, and credit cardssometimes that involves helping them out with their credit.

Contrary to popular belief, you may learn the hard way that co-signing could be the worst decision you made and for the following reason:

If your child is late with payments or defaults on a loan, the creditor may not be required to notify co-signers (you) when a borrower falls behind. This requirement varies from state to state, but the result could be the same: your credit rating gets whacked in the process.

A better option to help your child build a solid credit history is to have them co-sign your loan or credit card. Statements are sent to you and your child can still access a line of credit while building up their credit history.

Many parents fail to realize that their own credit history is at risk when they co-sign for a loan. You can’t intervene when you are not aware of the problem.

(Source: BottomLine Personal)

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