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Is it wise to co-sign for your young adult child?

On Behalf of | Apr 14, 2022 | Uncategorized |

Florida parents are often willing to financially help their young adult children. There may be times when it might be a good idea to co-sign for your child.

What does it mean to be a co-signer?

If you co-sign on a mortgage or apartment lease for your young adult child, it means that you become completely responsible for their debt. In other words, if your child defaults on their payments, you will then have to pay. As a co-signer, your credit can suffer even if your child pays back their debt on time. This is because creditors see you as a risk due to their financial situation.

Why should you co-sign for your child?

If your child has a history of being responsible when paying their rent and bills, it’s not considered as high a risk when you co-sign for them. You can also do so if you are planning on paying off their loan or rent yourself. Having your young adult child’s name on the loan or lease can help them build a solid credit history.

When should you avoid co-signing?

You should keep in mind that if you co-sign for your child, you might not be able to take out a new loan or sign up for new credit if they aren’t as responsible about paying as you’d like. This could also occur even if they make timely payments each month but you already have too much on your borrowing plate or are in debt yourself. Lenders often see people who co-sign as being a greater risk. Your credit score might also decrease if your child makes a late payment or misses a payment.

If you are considering co-signing for your young adult child, be sure it’s the right move for you.