Before co-signing a student loan, make sure you know what you’re getting into because doing so will have a great impact on your credit report if left to linger. If you agree to co-sign a student, you are officially saying that you are responsible for that person whom you co-signed for. Read out the article to know about the things which you should consider before co-signing student loan.
How Co-Signing Student Loan Affect Your Credit? Before co-signing a student loan, make sure you know what you’re getting into because doing so will have a great impact on your credit report if left to linger. The three major credit agencies determine your credit worthiness and you wouldn’t want to risk that. If you agree to co-sign a student, you are officially saying that you are responsible for that person whom you co-signed for. And if that person neglects his or her loan, then you will be obliged to pay for it whether you like it or not. There may be a good reason behind this but there are a lot of things to consider too aside from that. The significance of agreeing to co-sign for a student is that, you borrowing ability will be affected because the lenders will see you as if you borrowed money just for yourself. Most lenders also confirmed that 4 out of 5 co-signees had their co-signer pay for the debts that the person owes. If the person you co-signed for missed out on their payments, it would seem like you are the one who missed paying it. The co-signer will always remain responsible for anything no matter what happens. If the student gets into a financial difficulty and you co signed him for his education three of four years after, the lenders may pursue you for the necessary payments. In some yet extreme cases, the lender will force you to sell the assets just to pay for the debts. Most parents are asked to co-sign for a student’s tuition because the student had a poor credit score report. And often times, the young person who applies for his first credit card will require all the papers and necessary documents to be co-signed. If a student fails to pay for the agreement or bills that you agreed to co sign, usually, the lender will first make an effort to have him pay what is borrowed before asking the co- signer to pay for it, which is actually governed by the laws in which the contract was signed. Always remember that before you co sign a loan, you should have a lawyer draft a contract that will officially set out the student’s and your obligation to the debt. You have to ask him to enumerate the steps that one should take to pay back the debt. It is also very important to include the steps that the student should take to repay the loan. This document may not prevent the creditor from pursuing you for the payment but at least it will formalize duties of the co signee. It is not wrong to agree to co-sign for someone, especially if it means that you’re help him or her out finanancially. But always be cautious and think about the consequences too in order to avoid possible dilemma’s in the future. Get your credit report free now and check for any errors, discrepancy, identity theft or bad credit. To keep your credit score high, it is important to keep a track on the 3 bureau credit score and 3 credit report regularly.
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