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Know the Facts Before Co-Signing
Do not email any account or personal identification information.
My roommate and best friend needs a car.
However, he doesn't have any credit history,
so he can't get a car loan on his own. He
asked me to co-sign. I've heard horror
stories about people who got into trouble
with co-signing. But, he's my best friend. It
will be all right, won't it?
Co-signing can help a friend or relative in need, but it comes with risks. Understanding
what the risks are, and why your friend needs a co-signer, can help you make an
informed decision and not unnecessarily jeopardize your financial future.
If your friend is late with payments or does not pay that debt, it can lower your credit
score. If the payments are several months past due, you may begin getting phone calls
from creditors or a collection agency.
e creditor is under no obligation to try to collect from the primary applicant before
taking action against you. If he stops making payments, do you have the money to pay
the bill? If not, co-signing may not be a good idea.
Your friend does have alternatives, however. He can take some time to build his credit.
He should consider a secured credit card. e interest rate on a secured card is often a bit
higher than on a regular card, but a secured card can offer the convenience of a regular
credit card and, after paying on time, can help people build or improve their credit.
YOU ASK – WE ANSWER!
Money Repair
To address other financial questions, call Redstone at 256-722-3796 or
email aspire@redfcu.org.
