To Co-sign or Not to Co-sign Loans for Family…That Is the Question
Those of you who recently filed bankruptcy (and those bad credit scores) may be tempted, like I was, to ask a friend, parent or relative to co-sign on a loan with you.
Don’t do it.
It weakens your position with lenders. Once a lender sees a co-signer on one of your loans—the lender will question your stability and move into “cover their butt” mode. And the way lenders cover their butts, is by forcing you to get a co-signer on your next loan…and the loan after that…and the loan after that.
Bottom line: When you have an existing co-signed loan—the chance of a lender requiring a co-signer on your next loan increases significantly.
There are right ways to recover from bankruptcy (or just rebuild bad credit) properly and quickly. But having a co-signer only delays your recovery and sets you up for complications along the way.
If you are unable to qualify for the credit you need…take it as a sign that it is not meant to be…until you can qualify on your own.
What if you are asked to become a co-signer?
I have a core belief…and it goes something like this, “Lend people money only if you can afford not to get it back and you won’t hold a grudge if you don’t—but never ever lend people your credit.” Read more of this >>
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