..Be sure that you are in a position to make the payments so those smiles don’t turn into scowls and hurt feelings!

A recent survey conducted by CreditCards.com surprised me in how often a cosigning situation doesn’t go as planned:

A new CreditCards.com survey of 2,003 U.S. adults revealed the negative results from co-signed loans gone wrong.

• Lost money: 38 percent of co-signers had to pay some or all of the loan or credit card bill because the primary borrower did not.
• Credit damage: 28 percent experienced a drop in their credit score because the person they co-signed for paid late or not at all.
• Hurt relationships: 26 percent of respondents said the co-signing experience damaged the relationship with the person they co-signed for.

A good reminder to think long and hard about this before asking a parent to co-sign…you don’t want to have that awkward Thanksgiving dinner when you have been missing payments and your parents have had to cover for you.

_____

Check out this NGPF Activity: Should They Open A Credit Card?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.