Here’s How Cosigning a Loan Could Impact You

December 3rd, 2020 by
Considering Cosigning a Loan? Read this First

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What do you do if a friend or loved one cannot get a loan or doesn’t have the best credit score?

You may consider cosigning a loan, but what does that mean for you? Here is a list of things to consider beforehand, according to MyFICO

What is cosigning?

Putting it simply, if you cosign a loan for someone, you are entering into an agreement that if the person you are cosigning for defaults on the loan, you would be responsible for those payments. 

What would happen to me if the person whose loan I cosigned didn’t pay their bills on time?

If the person who you cosigned the loan for didn’t keep up to date with payments, this could have a negative impact on your own credit score.

This could also negatively impact your financial health. 

ALSO READ: Watch Out For These COVID-19 Scams

What’s the Bottom Line?

While it may seem selfless to cosign a loan for a loved one or good friend, it could have serious implications for you in the long run. Make sure the person you are helping out is trustworthy and someone who is responsible for their finances. 

It’s good to make sure you’d be able to afford their debt if they cannot pay or default on their financial commitment before you agree to cosign. 

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