As your kids become adults they are stuck with one hurdle right off the bat, they have no credit. They have no score and because of that simple necessities of life such as car, student loans, or a credit card can seem impossible. Usually, to obtain these things they will need a cosigner and that is where they want you to step in. By having you Co Sign they can add your credit history and income to theirs when they apply for the debt making it easier to qualify. So should you Co-sign? Before you decide here are some of the benefits and drawback to co signing.
Benefits Of Co Signing
They Will Be Approved- The first main benefit is it will allow whomever you signing with to get the car or loan they need.
They Will Be Able To Build Their Credit- Even though it will mostly be your credit and income guaranteeing the debt it will report on both your credit reports. This means that they will be able to build a credit score so that hopefully next time they can qualify on their own.
You Will Reap Credit Benefits As Well- Just as they will feel the positive effects of having the debt paid on time so will you. As long as the debt is paid on time every single month it will benefit the payment history portion of your credit score which just so happens to be the largest.
Drawbacks To Co Signing
Any Missteps Affect You- What this means is that any missed or late payments or the account going delinquent altogether will affect you and your credit. It will report just the same for you as the secondary signer as theirs the primary.
Collections Will Affect You Too- Once the account is past due any collection efforts come will come your way as well. This means collection calls, collection letters, and even lawsuits if they cannot collect. Lawsuits potentially mean garnishments, judgements, bank levies and all other sorts of headaches.
So should you co sign? Well that is up to you. We just recommend that if you do you make sure that whatever the payment for the loan is you can cover it in the event whoever you co signed with can’t. While you obviously don’t want to make the payments and that is not the reason you co signed it if comes to it it will save you much headache later on.