Question about co-signing.

[NikoD]

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@mrgoattoo wrote:

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@Gunnar419 wrote:

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@bobkmn wrote:

I am working hard to improve my credit score and it is currently 700+. My question is this, my son has asked me to co-sign for a new vehicle for his fiance. She just went through a divorce and her ex screwed things up and messed up her credit. The problem has allegedly been fixed, but her credit is still low. I know that they can make the payments so I am not concerned about that--I am just wondering if my co-signing will negatively affect my FICO score by adding additonal liabilities to my finances?

Thanks for any help I can get.

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No matter what it does or doesn't do to your score in the short term, the tales of people who've been burned by co-signing are many and heartbreaking. You know your son's fiancee CAN make the payments. But WILL she? What if they break up and she decides to get back at him by burning you? What if she loses her job? What if she gets sick? What if, what if? If she quits paying for ANY reason, you get stuck with all the lates, with the repo, with the responsibility for paying any shortfall after the vehicle is auctioned off. Nightmare City.

I also don't trust the phrase "The problem has allegedly been fixed, but her credit is still low." If the problem has really been fixed, then why is her credit low? Why is your son asking YOU to co-sign, rather than doing it himself?

Sorry, I hate to sound like a grouch, but I've seen too many people whose good credit has been destroyed by co-signing. Unless you have some really, really strong reason to do this, and unless you have solid knowledge that the fiancee's finances and character are both golden, I wouldn't touch this situation.

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What he said.

Ive worked very hard to get my credit score where its at. Years as a matter of fact. Im not risking it hoping someone else will pay their bills on time.
If it were me Id' tell the son to have his fiance look for a car where she can get financing. It'll cost more but if she needs a car she'll do what she has to do to get one.

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Agreed, I understand why he's willing to do it but it's not a risk I would be willing to take. Even trustworthy, responsible people can make a mistake once in a while and forget to pay a bill on time. It seems like the OP knows the risk though and is willing to take it.

[bobkmn]

Thank you. Yes I am. I have faith in the people involved. Understand the risk, but from my perspective it is at most neglible.

[mrgoattoo]

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@bobkmn wrote:
Thank you. Yes I am. I have faith in the people involved. Understand the risk, but from my perspective it is at most neglible.

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I apologize. Ive been burned fairly badly so Im pessimistic regardless of intentions.

I had a situation in the late 80s with someone I should have been able to trust in my family with some very serious and very personal issues who betrayed me.

I dont really trust many people anymore with anything they say they will do, especially where money is concerned.

I hope all goes well for you and your son and his fiance

[bobkmn]

Understand. Thanks

[pennccrn]

Late to the thread, but wanted to throw my $.02 in. 

From a strictly dollar and cents perspective, under no circumstances, would I ever under any circumstances ever co-sign a loan. My take is if they cannot afford the loan, then paying for cash is the way to go. Even if means driving a sub-standard car until they are back on their feet. However, from a family perspective I do understand if you have the ability to help someone out out of caring and love, its hard to say no in these circumstances. So I do understand. Food for thought, how about taking the loan in your name and having them pay you. That way, you can control and make sure the payments are being made. I do believe a cosign creates a hard pull, which dings you about 10 points in the short-term.

As far as the Discover It VS Citi, I think Discover is a little more liberal with credit limits once you get to a low risk point ... I prob say FICO scores greater than 740. The trade-off is acceptance, but Discover's mall is pretty extensive if you do a lot of online shopping where you can get 5% back if you do a lot of online shopping. Keep in mind, you have to enter the merchant through the discover website. I'm sure everyone has their own viewpoint on these cards, but I like Discover very, very much.

Just my $.02 as always,

-Nick

[Anonymous]

I am always impressed by the courtesy of everyone on this board, so let me give it to you straight. The quickest way to destroy a family relationship is to turn it into a business transaction by loaning money or co-signing a loan. Don't do it. Anyway, you can't afford to take the risk. It would be one thing if you had loads of money in the bank, but you already have credit card debt. You can't afford to pay off this car if the woman defaults. To co-sign for a daughter-in-law under those circumstances would be dumb. To do it when she just got divorced and isn't even married to your son would be DUMB!!! If she's actually a responsible person and is only suffering a credit hit from things her former husband did, within a year her credit situation will be much better. Until then she needs to drive a car that she can afford, even if it's a clunker. If they do get married, you can give them a wedding present to help with a downpayment on something better.

[Buddy2002]

Plain and simple.  DON"T DO IT!!!

[Anonymous]

agreed. dont do it. nobody will ever care as much for your credit as you will

[bobkmn]

Thank you all for your input. My question was on the effect of co-signing on my FICO score, not whether or not I should co-sign. The latter was never a point of issue. Although I agree with what folks here have said, you would have to be in my situation and know the people involved in order to make the decision I made. In December 2012 I co-signed a lease for him for over 1200/mo and had absolutely no problems. They are both very upstanding people and have long standing jobs in the corporate field and have both worked their way up to management, he is a Executive Vice President. I looked for a way to pull down my initial post but it did not seem possible. 

I hope that all of you will give me at least some credit (no pun intended) for knowing what I am doing in deciding to co-sign for the loan. She expects to be able to refinance it within a year.

Thank you all.

[Anonymous]

Oh man.  I saw your post in the most recent E-mail newsletter and had to respond.

Your credit could definitely be impacted by doing this.  Not very much by actually co-signing itself.  But there are a few things you should conider.  One is that you should say you need to see the fiance's credit report and score yourself.  But even more than that, they might be able to afford the payments now, but what if one of them loses their job or they forget to make a payment?  What if they don't get married or end up getting a divorce?  I hate to say it, but if your son's fiance allowed her ex to ruin her credit, she wasn't considering this before it started happening.  I would have stopped it before it could start.  I would have taken my name off some accounts so I wouldn't be stuck with bills I couldn't afford.  Or whatever the situation that ended up happening, I would have thought that it could happen and would have stopped it before it did happen.

I don't know if you watch Suze Orman, but she would say the same things I just did because she gets calls like this all the time, either from people who already have experienced a hardship after co-signing or right before they co-sign like you are.

Don't do it!

There are companies out there that can help people with "not-so-perfect" credit obtain financing for a car.  In Washington state, there are two.  I can't think of one, but another if Pierre Money Mart.  Something you could help them on without risking your credit history is to research for a company like this in your area.

Good luck.