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Being a co-signer can lead to damaged credit score
By Oscar Monfort on Mar 31st, 2010
Given that lenders are being more careful when it comes to granting loans, some people may need a co-signer in order to validate getting money.
However, doing so may present a problem for those who agree to sign on to a person's loan. If the primary borrower doesn't keep up with their payments, the co-signer may find that their credit score will be lowered.
Such was the case for a reader who wrote in to financial expert Liz Pulliam Weston. The co-signer agreed to help with an auto loan for a friend, only to have that person miss payments.
Pulliam Weston said that it will take some time for the co-signer's credit score to return to its previous levels.
"The late payments will remain on your credit report for seven years, although their effect will fade over time if you handle the rest of your credit responsibly," Pulliam Weston wrote.
Recent changes in laws for credit cards may have some parents finding themselves facing the question of whether to co-sign for a child's credit card. If they do so, and the child doesn't handle their credit responsibly, one idea the parent may consider is debt consolidation. Doing so may lower the interest they pay on all of their credit card debt, which could make it easier to pay off.
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