Before you co-sign a loan or credit card, make sure you understand there's a good chance you could lose some money or damage your 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.