You Risk Ruining Your Credit Rating

 

When you cosign a loan, your credit is affected immediately.  Does this shock you?  You see it doesn’t matter that the loan may eventually be paid in full by the initial borrower.  Your credit will be affected the minute you sign the paperwork. 

 

How does that happen, you ask?  It happens because the loan details get reported to the credit agencies on a regular basis and this goes on your personal credit record also because you are a co-borrower.  The federal Equal Credit Opportunity Act requires lenders to report information about co-borrowers equally.

 

Even if you never have to pay on the loan, your liability for the loan may keep you from obtaining other personal credit that you desire.  Lenders will consider the fact of the cosigned loan as part of your accumulated debt responsibility.  Because of this, lenders may not extend to you additional credit.  This additional debt load you assume as a cosigner weakens your ability to borrow for your own personal needs.

 

 

Your thoughts on this subject?  Your comments appreciated!

 

Content © Rich Brott, 2011

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