co-signI am often asked, "Is it okay for me to co sign a loan for a friend or family member?" My answer is always NO! There are several reasons I say no.

First of all unexpected things happen to all of us and it is easy for your friend or family member to get in a situation where they cannot make a payment. A new late on their credit report will also appear on yours and will drop your credit scores significantly. When you co sign for them, they have every intention on making every payment on time but we all know that can change quickly. As I said unexpected things happen that effects us all.

When you co sign, the debt of that loan will appear on your credit report and will be totaled into your debt to income ratio. This can effect your ability to qualify for future personal financial transactions. You become co responsible until that debt is paid in full.

We are all good hearted and want to help a friend or family member when we can, but obligating yourself for the duration of the loan is not a wise decision to make. Unexpected set backs can strain even the best of relationships.

It would be wise to make the decision that you will not co sign for anyone, ever. That way when someone comes to you and plays on your sympathy your decision is already made. You can simply say: "I made the decision a long time ago that I can not co sign for anyone, ever." They may be disappointed but they will get over it and you have protected from a difficult situation.

At HOPE we help our clients make wise decisions every day related to various credit issues they face. If you would like to know more about HOPE please call us at 704-503-3669. We will be glad to help you.