Credit is so incredibly delicate, because one ‘little’ mistake can cause your score to plummet but it could then take years to build it back up.
Los Angeles, CA (PRWEB) July 30, 2012
RoadFish.com men’s lifestyle and finance magazine today offered words of warning against co-signing on a mortgage for a friend in need, after referencing a Huffington Post article about a writer whose credit score crashed after her friend defaulted payments on a co-signed home loan. RoadFish.com gave its readers advice on different ways to help friends who are having financial problems as an alternative to giving them money or co-signing on loans, which puts the co-signer’s credit at risk.
Freelance writer Sibylla Nash wrote in a recent article for the Huffington Post that co-signing on a friend’s mortgage was her first big mistake. Nash states that the two had been friends for two decades, and the woman was somebody she trusted and spoke to often. The article states that she was naïve enough to believe that her friend wouldn’t miss any payments, and assumed that the friend strongly valued both of their credit histories. Another of Nash’s mistakes included not checking her credit report until it was too late, after her score had dropped over 200 points when her friend missed three mortgage payments. The house is currently under contract for short sale, and the total amount of mortgage owed tops $30,000.
RoadFish.com used Nash’s unfortunate experience to demonstrate just how fragile credit is, and how risky it is to co-sign a mortgage for a friend. RoadFish.com’s Senior staff writer is quoted as saying, “Credit is so incredibly delicate, because one ‘little’ mistake can cause your score to plummet but it could then take years to build it back up. I would not recommend putting your credit in somebody else’s hands, regardless of how much you trust or love them. Once you co-sign on a loan, you become equally as responsible for paying that money as the person you are signing for. That’s a bigger responsibility than most people realize, and one that can have a devastating effect on your credit. Even if your friend makes the payments on time, co-signing on a big loan increases your debt-to-income ratio and can put a dent in your score right off the bat.”
RoadFish.com points out that there are other ways to help friends with financial woes other than co-signing on a loan or giving or lending them money. RoadFish.com recommends giving time and support instead of money to help friends get back on their feet. RoadFish.com’s Senior staff writer is quoted as saying, “It can be very tempting to give money to friends who have been laid off or had hours cut at work, but there are other ways to be supportive. It could be incredibly helpful to sit down with them and help them come up with a monthly budget that will track their spending. Then after a month, you could get together again to analyze what spending they could cut out to maximize savings. Introduce them to apps for their Smartphone that will track their spending and remind them of upcoming bills. I love Mint.com’s free app as well as Debt Minder and Bill Tracker. If your friend is looking for a job, try to establish connections for them through people you know, or proofread their resume. And most of all, be supportive of them and let them know that their money situation is nothing to be ashamed or embarrassed about and that you’re there for them.”
In the above-mentioned Huffington Post article, writer Nash states that she wouldn’t recommend “co-signing on a stick of gum for anyone” after what she has been through. But Nash states that she has learned from her mistakes, and has been paying down credit cards for two years to bring up her score. She also learned that monitoring one’s credit score can be a key to catching errors or staying on top of activity that could otherwise be devastating if caught too late. There are ways to get a free credit score report, although these are only available once per year; to receive a monthly report costs a small fee.
RoadFish.com is a popular online men's magazine that features articles on lifestyle and finance. Its main audience includes men in their 30's and 40's who are succeeding in life, and have set their sights on bigger personal and financial goals. RoadFish.com men’s lifestyle and finance magazine includes articles topics such as men's luxury items, hot chicks, current events, exciting adventures, and the latest information on credit trends. It is owned and operated by Purpose Inc.