That’s the default answer you should say if someone asks you to co-sign a loan for them. Even if that someone is your child or spouse.
Why? Because the risks outweigh the benefits.
You might co-sign a loan for a car you’re not driving or a mortgage for a house you’re not living in. But that doesn’t change your liability. Co-signers take on 100 percent of the risk of the loan is not repaid.
On the flipside, your credit score benefits only slightly from timely monthly payments on a loan you co-sign.
If the loan does go into default, lenders will come after co-signers for the payments and balance. And they will sue co-signers first. Their focus is on the party with the better credit who is more likely to repay the debt.
And consider your life plans. Are you in the market for a house or a car? You may need to use your own credit, and if there’s already too much credit in your name from co-signing, your loan application could be denied.
So save your relationships and your finances. Just say “no” to co-signing.
Need more reasons to steer clear of co-signing? Check them out here.