The Risks Of Co-Signing For Credit | Refresh Financial

The Risks Of Co-Signing For Credit

 Co-Signing For Credit

When it comes to the idea of co-signing for a loved one, you've probably read a handful of financial blogs or magazines that have warned against the idea. At the Dime Turner, we've said it a few times as well. Co-signing can be a risky road that often turns sour. With that said, we'd like to provide you with five, real-world examples of how people have regretted co-signing for credit.

 

That time a father was being harassed at work for a loan he co-signed for his son

- This is an example of a father who co-signed a $25,000 loan for his son. With only a thousand dollars left owing, the son believed the entire loan was paid off. Unfortunately, the creditor was unable to get ahold of the son because of his updated contact information. Now the father is being harassed at work and will have to deal with damage to his own credit score.

When a guy co-signs for his girlfriend’s line of credit and they break up

- Co-signing for your girlfriend or boyfriend is especially risky. Even if you break up, your ex's debt is still yours in the eye of the law. In this example, after a breakup, this guy sees his balance grow to $7,000.

That time a friend co-signs for a friend and years later it comes back to haunt him

- We’ve all been through low points in our lives, where it's easy to make poor choices. In this case, you have a guy who decided to co-sign a student loan for a friend. Fast forward four years and this guy has rebuilt his credit and got his financial life back on track. Everything was looking up until he received a letter notifying him that the old student loan he co-signed for is now delinquent. Just like that, everything he worked so hard for is in jeopardy because of one poor decision made years ago.

When a 94-year-old aunt has to pay down her deceased nephew’s student loan

- A caring aunt was just trying to do what she could for her nephew by co-signing a student loan for him. Sadly, he lost his life abruptly and now, she’s on the hook at 94 years of age, for $30,000.

When trying to be the good guy costs you $15,000 in debt

- In an attempt to help a good friend, he co-signed a loan. Later, he finds out the payments are behind and he’s on the hook for $15,000.

It's uncomfortable to read these personal stories and accounts where things go south. Hopefully, they open your eyes to the incredible risk you expose yourself to when you co-signing for a friend or loved one. Unfortunately, we can't control other people’s actions. There is no way to guarantee people won’t take your generosity for granted. Think long and hard before signing those documents and consider how much you are willing to sacrifice for that person.

Have you ever co-signed or considered co-signing for credit for a loved one? How did that turn out? Let us know in the comments!

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