Should you co-sign a loan or credit card for a friend or relative? This is becoming a common question as the economy makes it harder for people to obtain loans.
1. It's your debt now. As a co-signer of a credit card-or any bank loan, you are responsible for any money owed. If a friend or relative decides to charge a $3,000 trip to Mexico, say, you are liable for that debt.
2. Your credit is on the line. If the co-signee makes late payments or defaults, guess who the lender will come after? Not only could you end up paying for their debts, your credit would take a hit.
3. Protect your score. In rare cases, when you 100% trust the person, you may want to co-sign. But just remember that their debt will show up on your credit report, and could make you look overextended to creditors, who heavily weigh the percentage of your available credit when calculating your score.
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