You Can't Hide a Late Payment from your Co-Signer
Thinking of co-signing for someone on a real estate contract? You'd better have a lot of faith in them or it could ruin your credit. Read what Margaret Woda has to say about co-signing.
If you make a loan payment 30 or 60 days late (or, God forbid... even later), you can't keep that secret forever from your co-signor. He may not know about it today - but two things will happen soon:
1) The co-signer will start receiving those nasty collection calls like you've been getting.
2) The co-signer's credit score will be reduced anywhere from 60-110 points for a single 30-day late payment. (Repeatedly, if you have multiple 30-day late payments.)
Your late payment could cost your co-signor the ability to buy a car or refinance a home or - at the very least - it will cost him a higher interest rate for the life of any new loan. In some instances it could even cost him a job or the ability to get another one. That's NOT a very good way to show your appreciation to someone who put everything on the line for you when a potential creditor doubted your character and commitment.
The damage to your co-signer is not easily undone, even after you catch up with payments. That's because rebuilding a credit score begins with rebuilding one's credit history, and there is no magic formula for how long that will take. Unfortunately, YOUR late payment will remain on your co-signors credit report (as well as yours) for seven years.
Since you can't hide late payment from your co-signer, offer him the opportunity to make your payment on time. He may prefer to make the payment rather than suffer the potential consequences to his financial credentials from a late-payment.
Your credit score will be spared from damage, as well, if your co-signer does make that otherwise late payment. But don't treat it like a government bailout. Show your appreciation by reimbursing your co-signer as soon as possible.
It's the least you can do to prove your co-signer's confidence in you was justified.
It was, right?
Copyright 2010. All rights reserved.
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For answers to your real estate questions about Bowie, Crofton, Davidsonville, Fort Meade, Gambrills, Odenton and other communities in Anne Arundel County or nearby Prince George's/Howard Counties, Maryland, contact Margaret Woda at Long & Foster. If you prefer, simply click on a button below for information you can review online at your own pace.
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