You Need to Protect Your Credit When Co-Signing

Now, it is very understandable that you would want to help out one of your loved ones when they are looking for a loan. Co-signing can offer them a great alternative and help they may need. But you should not co-sign if you are not comfortable. Here are some things that you need to look for when go to co-sign for a friend. Make sure you are protected.

Caution: Hazard Ahead?

Your daughter comes to you and says �Mom/Dad I really need this mortgage for my new home, but my credit is not good. Could you please help me with this problem by co-signing for me?� Well, she is your daughter, you love her and want to help. But you need to ask yourself, and ask her some good questions.

Why is her credit in bad shape? Did she forget to pay bills or did she spend more money than she had on more then one occasion? Both? Credit can be traced back to responsibility. If you manage your money well and you are responsible with what you have, then you should be alright. But if you cannot handle your money, then you will be a risk.

You really need to get to the bottom of why she misplayed her credit, and what she thinks she will do now to get her credit back on track. She needs to regain responsibility if she expects people to help her.

Your Newfound Responsibility in this Situation

When you co-sign, you will know be partly responsible for her loan. Co-signing means that you will assume responsibility of the loan if the original loaner does not come through. So if you are ok when carrying on the loan if your daughter defaults, then ok. But if that is not something that you need to happen, shy away. You can deny it all you want, but once your name is on the list, you need to make sure the payments get paid on time. Otherwise you may find you are the one who is paying it.

Love May Cloud Your Financial Vision

It is great that you want to help, but you need to watch out for your finances also. This is especially true if you have great credit. You have spent years on making sure everything goes ok, do not let a bonehead move affect it. Make sure you are always aware of what is happening. So if you co-sign, make sure the person you are helping has respect for what you are doing to them.