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Posted in Student Loans
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ronij

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defaulted student loan
Transferred for recovery

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question about credit score

I dont quite understand what will happen to my credit. I co signed a student loan for someone, whom stopped making payments and the loan defaulted. Now the student loan says closed and transferred for recovery in the remarks. Will my credit score be effected drastically by this? How bad will it be when the loan hits my credit as collections?

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Why I don't recommend co-signing.

When yoou co-sign any contract (and a student loan IS a contract) you are guaranteeing that, should the borrower default on said loan, you will be the one responsible for the repayment. Yes, this is going to oimpact your credit score because the loan was defaulted.  How much your score will be hurt is hard to say since all the necessary information is not shown here.  But this loan will remain on your credit report until it is paid in full.  Generally, student loans are not dischargable in bankruptcy nor do they have a 'statute of limitations' (time period before they vanish).  The loan is clkosed which means the borrower can not get any more funds from the student loan companies.

The actual purpose of this site is to teach people about credit, and how to maintain a good credit score.

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