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Weekly Tips

To Co-sign or Not?

If you have good credit, there will likely come a time in life when a close friend or relative asks you to cosign a loan. Should you say yes?

The easy in answer is "no", and here's why. Since you've worked hard to build a solid credit history, you need to protect your credit score. Co-signing for a loan means you're guaranteeing the lender will get paid, so don't be fooled into thinking it's just a formality. It will show up on your credit report, and it will negatively affect your credit score if the other signer fails to make payments. Co-signing is a serious commitment, and should be treated as such.

Of course, turning down a child or sibling in need isn't an easy thing to do. So, if you're ready to sign the bottom line in spite of the consequences, be sure you can answer the following two questions with a resounding "yes".

Can I, without a doubt, afford to make the payments? And if I end up making the payments, will I still be happy rubbing elbows with the other signer at Thanksgiving dinner? Now, the decision is yours to make. Good luck!

on Mon, 2009-10-05 17:00