To Co-sign or Not To Co-sign...That's A Question That Can Ruin Your Credit

 


Visitors: 181

Many times in life we are faced with a hard decision. Whether to co-sign or not to co-sign will be one of those hard decisions. You have worked hard to keep your credit score high, and you have no problem whatsoever in getting approved for a any loan or credit card that you apply for. Not everyone is so lucky.

What co - signing means to you, is that you are jointly responsible for the loan or credit card that you are co-signing for. If the person you co-sign for falls behind on the payments the creditor expects YOU to make the payment. If the payment is not made, not only will this be a black mark on your credit, but if the creditor decides to take legal action, they can file against you too.

If a creditor does this to you, they can sue you for the money owed, sell your assets, or even garnish your wages to get their money, and ruin your credit rating in the process.

If you are considering co signing for someone, you need to think very seriously about what the risks are. You should also ask yourself the following 5 questions before signing on the dotted line.

1. Are you wiling to lose your assets and good credit rating by co signing? This is a tough question because you wouldn't be considering helping someone out if they weren't important to you, and you didn't think they were responsible enough to make payments.

2. Why does the person need you to cosign? Think about why the person needs you, is it because they have a really bad history for not paying their debts? If they are young and wanting to go for their first loan, ask yourself if they are mature enough and have the financial means to pay the payments on time for the life of the loan. If you have any doubts about the person, you shouldn't volunteer as a cosigner

3. Have you read the fine print of the contract carefully? Make sure you are informed and know exactly where you stand, and what the lender can and can't do to you. Don't think a lending institution has your best interests at heart. Make sure that you understand the agreement thoroughly, and don't let them push you around.

4. Ask about negotiating the terms with the lender, which may include limiting the liability that you are responsible for to the actual amount owed, not including penalty fees, or late charges etc. Also, make sure that the lender will notify you if there are any late payments, that way you can fix the problem up quickly before it ends up on your credit report, or even worse the loan is called in by the creditor.

5. Are you able to pay the loan in full if the person you co signed for defaults? What will happen to you if you have to find the money yourself? If you can't afford it, don't do it, as much as you want to be helpful, some things just aren't worth the risk.

If you have the means to cosign and are confident that everything will be fine, before committing to the loan make sure that you have taken the time with the borrower to explain the ramifications that will take place if they default on the loan, and discuss how they will pay you back if this happens. Don't forget to get everything in writing!

Liz Roberts is a loan consultant with NHBSInc. They specialize in providing sub prime financing. For a current list of bad credit credit card offers please click here =>/Info/unsecured.htm

(630)

Article Source:


 
Rate this Article: 
 
What's Your Sign?
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

To Co sign Or Not to Co sign? That is the Question

by: Michael G Harrington (July 16, 2008) 
(Finance/Credit Tips)

Sign Up-Paid Sign Ups-Guaranteed Sign Ups Are A Waste Of Your Money

by: Joe LoBalsamo (May 30, 2007) 
(Home Based Business)

Pizza Talk: Sign Synergy, How Your Window Sign and Web Site Work Together to ..

by: Rudy Vener (October 02, 2005) 
(Business/Marketing)

Home Security - "Sign - Sign - Everywhere a Sign"

by: Jack Krohn (June 06, 2007) 
(Home Improvement)

Sign of Cheating Spouse - There is No Sign

by: Daryl Campbell (October 23, 2008) 
(Relationships/Affairs)

Sign Language Learn American Sign Language Easily

by: William Dean (July 02, 2008) 
(Reference and Education/Languages)

Should You Sign Your Credit Card?

by: Joseph Kenny (September 11, 2005) 
(Finance/Credit)

Credit Repair Services - Reasons Why Not To Sign

by: Hilary Bowman (March 31, 2008) 
(Finance/Credit)

Sign of a Yeast Infection What is the Main Sign of a Yeast Infection?

by: Steven James (June 20, 2008) 
(Health and Fitness/Diseases STDs)

What's Your Sign?

by: Paul Kearley (March 03, 2008) 
(Self Improvement/Positive Attitude)