U.S. markets close in 2 hours 37 minutes
  • S&P 500

    4,273.61
    -31.59 (-0.73%)
     
  • Dow 30

    33,981.24
    -170.77 (-0.50%)
     
  • Nasdaq

    12,928.83
    -173.72 (-1.33%)
     
  • Russell 2000

    1,986.17
    -34.36 (-1.70%)
     
  • Crude Oil

    87.81
    +1.28 (+1.48%)
     
  • Gold

    1,775.50
    -14.20 (-0.79%)
     
  • Silver

    19.72
    -0.37 (-1.84%)
     
  • EUR/USD

    1.0168
    -0.0003 (-0.03%)
     
  • 10-Yr Bond

    2.9020
    +0.0780 (+2.76%)
     
  • GBP/USD

    1.2045
    -0.0049 (-0.40%)
     
  • USD/JPY

    135.4400
    +1.2250 (+0.91%)
     
  • BTC-USD

    23,402.30
    -457.03 (-1.92%)
     
  • CMC Crypto 200

    556.07
    -16.75 (-2.92%)
     
  • FTSE 100

    7,515.75
    -20.31 (-0.27%)
     
  • Nikkei 225

    29,222.77
    +353.86 (+1.23%)
     

More Than 1 in 3 Debt Co-Signers Lose Money

More than one-third of people who co-sign for someone else’s loan or credit card end up literally paying for it, a new survey shows.

CreditCards.com’s survey of 2,003 adults living in the U.S. found that 38 percent of co-signers had to pay all or some of the debt because the primary borrower failed to pay it.

The repercussions for co-signers don’t stop there, though. The poll also found that:

  • 28 percent experienced a drop in their credit score because the person they co-signed for paid late or not at all.

  • 26 percent said the co-signing experience hurt their relationship with the person they co-signed for.

As we’ve explained in stories like “Answers to 10 Key Questions About Credit Cards,” co-signing is risky not only for your pocketbook but also for your credit score. If the primary borrower makes late payments — which you may never know — it could hurt your credit score.

Bottom line: You shouldn’t co-sign unless you’re ready and able to assume the debt as your own in the event your co-signer — for whatever reason — can’t pay.

The survey found that 17 percent of adults reported having co-signed for a loan or credit card. Co-signers tend to be:

  • At least 50 years old: Most co-signers are 50 to 64 years old (accounting for 24 percent of co-signers).

  • Wealthy: 24 percent of people who earn more than $75,000 annually have co-signed, compared with 11 percent of people who earn less than $30,000.

  • Helping a child or stepchild: Co-signers most commonly co-signed for a child or stepchild (45 percent), followed by a friend (21 percent).

  • Signing for an auto loan: People are most likely to co-sign for auto loans (51 percent of all co-signings), personal loans (24 percent), student loans (19 percent) and credit cards (16 percent).

For another reason why you should reconsider becoming a co-signer, check out “How and Why to Keep a Stellar Credit Score in Retirement.”

Watch the video of ‘More Than 1 in 3 Debt Co-Signers Lose Money’ on MoneyTalksNews.com.

If you or someone you know is struggling with common types of debt or is prepared to take on new debt, check out:

Are you surprised to learn how often co-signing ends up hurting co-signers’ wallets or credit scores? Share your thoughts below or over on our Facebook page.

This article was originally published on MoneyTalksNews.com as 'More Than 1 in 3 Debt Co-Signers Lose Money'.

More from Money Talks News