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Question By
Countrygirl7676

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Co-sign for someone with poor credit
If I have excellent credit & I co-sign for someone with poor credit, how will that effect my score?

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Top Contributor
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If you co-sign on a loan and they don't pay, then your credit will be affected detrimentally, and you will be responsible for the loan. I strongly urge you not to get involved.

Have the person obtain a secured credit card  in their own name.  That's what I did when my credit score was 485 and I have raised it to 796. I learned about credit abd read articles. That's what your friend or relative should do.

Reply by
Countrygirl7676

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He has a credit card already but its just a regular credit card. What is the advantage of getting a secure credit card?

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Reply by
mindjazz

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If he already has a credit card - great. No reason for him to obtain a secured one then. He should use no more than 10% of the credit limit at a time, pay it on time and in full.

Do not cosign on anything, since you plan on obtaining a loan in the future. It will affect your debt to income ratio.

Top Contributor
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Don't

Yes it will affect your credit if the account will go on your credit reports too which it most likely will. It would lower the "average age of accounts" and it would increase your debt. It will also affect your "debt to income ratio" which could make you ineligible for credit if you would need it in the coming years. If this person does not make their payments, the bank will probably not notify you in time until it becomes a negative on your credit and then they will come after you for the amount, they can place liens on your property and everything else. Obviously, this person has poor credit because they have a history of not paying their bills. Tell them that you cannot do it because it will ding your credit by adding the account and may prevent you from getting a loan for yourself if you may need one in emergency. It doesn't matter how well you think you know someone, many people have been burnt trying to help others by cosigning.

Reply by
Countrygirl7676

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I know the reason he has a low score and it was not because he didn't pay on his cards. He had excellent credit untill he got involved with a business partner that stole all the money and put him in a big financial whole. sometimes bad things happen to good people, so I know the reason his score is where it is...and know it was not his fault. He is back on track and back to paying all his bills in full for over a year now...it was also for a VERY small loan which he had the cash that was going to go into a savings account to back the loan. So I'm not worried about him NOT paying on the loan at all..I'm just worried at how it would effect my excellent score....since I may be looking to get another loan in a few months. My score is super high so i want to keep it there so i qualify for the lowest rate possible on a new loan. Wasn't sure if co-signing for someone would automatically bring my score down or not. I knew it would effect me if the person didn't pay on it, but wasn't worried about that since I knew it would be paid on time every month whether he paid it or I did...was just worried about what co-signing for someone with a poor score would bring my score down right away or not. Thanks

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