Clients may not want to co-sign for a loan or credit card

Survey shows that 38% of co-signers had to pay and 28% ended up damaging their credit scores.
MAY 11, 2016
By  Bloomberg
Before advising your clients that it's OK to co-sign a loan or credit card, make sure they know there's a good chance they could lose some money or damage their credit score. A new survey shows that 38% of co-signers had to pay some or all of the loan or credit-card bill because the primary borrower failed to do so. At the same time, 28% of co-signers saw their credit score decline because the main borrower either didn't pay at all or was late. Overall, 26% of the co-signers said the experience ended up hurting the relationship between themselves and the person for whom they co-signed. “With a 38% chance of losing money and a 26% chance of damaging a relationship, co-signing doesn't sound like a very good bet,” said Matt Schulz, CreditCards.com's senior industry analyst in a press release announcing the survey results. “If you absolutely have to co-sign, then at least be aware there's a sizable chance you'll lose some money and/or get your feelings hurt,” he said. About one in six U.S. adults have co-signed for someone else, mostly older adults helping out younger family members. Nearly half, 45%, of those who co-signed did so on behalf of a child or stepchild. Co-signing for a friend was a distant second at 21%.. Auto loans accounted for 51% of all co-signings. Personal loans, 24%, student loans, 19%, and credit cards, 16%, followed.

Latest News

Northern Trust names new West Region president for wealth
Northern Trust names new West Region president for wealth

The new regional leader brings nearly 25 years of experience as the firm seeks to tap a complex and evolving market.

Capital Group extends retirement plan services further with a focus on advisors
Capital Group extends retirement plan services further with a focus on advisors

The latest updates to its recordkeeping platform, including a solution originally developed for one large 20,000-advisor client, take aim at the small to medium-sized business space.

Why RIAs are the next growth frontier for annuities
Why RIAs are the next growth frontier for annuities

David Lau, founder and CEO of DPL Financial Partners, explains how the RIA boom and product innovation has fueled a slow-burn growth story in annuities.

Supreme Court slaps down challenge to IRS summons for Coinbase user data
Supreme Court slaps down challenge to IRS summons for Coinbase user data

Crypto investor argues the federal agency's probe, upheld by a federal appeals court, would "strip millions of Americans of meaningful privacy protections."

Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director
Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director

Meanwhile in Chicago, the wirehouse also lost another $454 million team as a group of defectors moved to Wells Fargo.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.