Hey fellas, I wanted to pass this article along because as we all know, it’s quite a popular time to be purchasing a home or refinancing one, because of the record-low interest rates in effect right now. That being said, it might be tempting for people to take out a mortgage to lock in these low rates–even if they aren’t necessarily financially prepared for it. Which can sometimes lead to the question of, “Hey friend, will you co-sign for me?” Here is a true “buyers-beware” story of a woman who did co-sign for a friend that she’d known and trusted for decades, and what happened to her credit when the friend started missing mortgage payments. Let’s just say it’s not pretty. But hopefully her story will demonstrate what a fragile thing one’s credit is, and how it must be protected. Once its put into somebody else’s hands, it’s not up to you anymore. Read the crazy story of what happened to Sibylla Nash, who wrote this article for the Huffington Post:
“In the fall of 2011, I went on an episode of “The Suze Orman Show” to ask her how to repair my credit, and I knew I was in big trouble when she told me there was nothing she could do.
My mistake was co-signing a mortgage for a friend, who ended up not making her payments.
It was just before the housing market crashed in 2008, when a close friend decided to make the leap from renting to homeownership. Like myself, she was a single mom. We had known each other since grade school, participated in the same Brownie troop. We talked on the phone daily and had over 20 years of friendship between us.
When, in the eleventh hour, the bank told her she needed a co-signer in order to close on the property, I said I would do it. I don’t even remember if she asked or if I just volunteered. It was a knee-jerk reaction to help a friend. I didn’t want to see her lose the opportunity.
That was my first mistake.”
Click here to see the pattern of mistakes that Nash made along the way, and what happened to her credit when her friend missed mortgage payments.
Am I in any way saying not to help out friends in need, of course not. Helping others is my main goal in life, as many of you know. My point is not to put your credit on the line in the process of helping somebody out, because credit is a very fragile bird; once damaged, it can take years to build back up, as demonstrated by the author in the above story. The other thing I would note is that had her friend had good credit herself, she would not have needed a co-signer in the first place. Yet another reason to maintain good credit– it can save friendships!!