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Should I Co-Sign On a Loan for a Family Member?

Written by Mechel Glass on April 17, 2014 in Credit  |   No comments

It can be hard to see someone struggling financially, especially when that person is a family member. If you have the means to help, you may feel like you cannot say no. But while co-signing with a family member can be an immediate fix to…

co-sign a loan

It can be hard to see someone struggling financially, especially when that person is a family member. If you have the means to help, you may feel like you cannot say no. But while co-signing with a family member can be an immediate fix to a situation, it can also cause turmoil in the relationship.

Even if you can do it, co-signing might not be the best solution to a family member’s financial problems. It’s important to understand all the risks associated with the process before making your final decision.

It could negatively impact your credit report and creditworthiness. When you co-sign with a family member, you are telling the lender that you will step in should the family member be unable to, or refuse to, repay the debt. The debt will show on your credit report in addition to your family member’s, just as if you took out the loan yourself.

If you co-sign a loan with someone who doesn’t pay his or her bills, the damage to your financial standing could be far reaching. The other person’s failure to pay could result in accounts being turned over to collections, lawsuits filed...

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