Email: mail@creditrescuenow.com
Phone: (505) 899-1448
Fax: (505) 792-7785
To co-sign or not to co-sign
One time or another, are children or family members will ask that question: Will you co-sign for me? Many times it’s hard to say no to our loved ones, but that is exactly what we need to do. Say no!
Over the last 23 years of helping consumers with credit problems, I have seen many instances were of consumers co-signing for their family members, only to find themselves not able to buy things they need. Why? Because the person they co-signed for missed their payments, or had their item repossessed.
Remember, by co-signing you are just as responsible as for the debt as the person for whom you co-signed. The account will be on not just the credit report of the person you co-signed for, but you credit report as well. Therefore, every time the person you co-signed for gets a late notice, you get a late notice. Whatever happens to their credit happens to yours.
Each “late pay” is 35 points off your credit score, which can hurt your credit qualification up to a year or more. In many cases, you will not know the account is late for up to 30-60 days before you hear from the collection department.
When your children and family members ask you to co-sign, the best thing to do is to offer to help them establish their own credit by using the “red robin” method. Here’s how it works:
- Take $500 a bank or credit union and open a secured loan for $500. They will take $500 and put it in an account and loan you the $500 back against your own money so there is no risk of the financial institution.
- Then go to a different bank or credit union and open up a secured credit card for $500. This will give you two lines of credit which will appear on your credit report within 60 days and will help you establish credit.
If your family members take this simple approach to establish credit, they can obtain their own loan without your help. Until next time, good credit to you.