If I co-sign for someone else, will it keep me from getting a loan?

A reader, Jamie, had this question:

If I co-sign for a loan, and need to get a loan myself, can co-signing prevent me from getting a loan for myself?

Jamie,

Yes, co-signing for someone else can keep you from getting a loan. It will depend on what your credit score is, how much other debt you have, and whether or not the person you co-signed with makes their payments on time. If they do not make their payments on time it will hurt your credit score.

As far as co-signing goes, you are liable for the debt just like the person you co-signed for. It will show up on your credit report just like you had opened up the loan yourself.

Also, if the person you co-sign with defaults, you are the one that is liable for the debt.

Assuming the other person pays their bills on time, you will still want to take a look at all of your total credit accounts. Are you using more than 30% of your available credit limit on any of your credit cards?

If you are using more than 30% of your credit, and you do co-sign for a loan, then it would be best to pay some of your debt down before you try to get another loan.

If you have a really excellent credit score (over 750) co-signing may not hurt you that much. It really depends on your total credit profile.

In your shoes, I would purchase your credit scores from FICO both before and after co-signing. This will give you the best idea of how co-signing for the loan impacted your credit rating.

I wish I could be more specific, but FICO’s credit score formula’s are closely guarded. The best I can do is give you a breakdown of how they are computed, and tell you that yes, co-signing can definitely effect your ability to get credit.

Thanks for your question!

What’s Cabela’s Address?

It’s bad when so man retailers expect you to pay online that they stop printing their addresses publicly!

A reader, Jim, had this question:

I need to know the billing address for Cabela’s visa credit card.

Jim

Jim,

Cabela’s website is frustratingly out dated, wasn’t it? It was difficult to find any information, at all regarding the Cabela’s Visa card.

While I was unable to find a direct billing / payment address, you can call World’s Foremost Bank (the issuing bank for Cabela’s Visa) at 1-800-850-8402. They should be able to answer any of your billing concerns.

What should you do about paid-off credit cards?

Finally, another reader, Mr. Stone, wondered what to do about his paid off credit cards.

I have several credit cards with a $0 balance is it better to close them or leave them open with the $0 balance?

Thanks for your question Mr. Stone.

Congratulations on getting your credit cards down to $0 balance!

If you want to raise your credit score, (or maintain a great one) then there is a two step process that you will want to take.

Step 1: Keep Your Accounts Open

Closing out a credit account lowers your credit score. It is always better to leave credit accounts open than to close them.

My only exception to this rule is if the credit card in question charges a high yearly fee, or if the customer service is so bad that you have to call halfway across the world to make a payment.

Step 2: Charge SMALL amounts to the credit cards each month.

Charge $20 or $30 on those two cards each month. Then make your payments early, before they can charge you any interest. This small balance, and record of timely payments will definitely raise your credit score over time.

It’s trouble to do, and trouble to keep up with. Especially if you want to stop using the cards. However, it’s the very best thing you can do to raise your credit score. Charge a small amount, pay the balance in full each month before the interest is computed.

If there are fees on the cards, call and ask to have them waived.

Now, if charging and paying off the cards each month sounds like too much trouble, just make sure that you waive any fees and leave the accounts open if possible. There is no reason for your credit score to take a hit – especially since you paid off the credit cards.

You can take full advantage of paying off those old credit accounts by leaving the accounts open instead of closing them.

Thanks for your question!

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Keep Reading and Grab our Free RSS Feed:

• How Does Co-Signing A Loan Affect Your Credit?
• Dangers of Co-signing – It Becomes Your Debt!
• The Co-signer Dilemma

This entry was posted on Tuesday, March 3rd, 2009 at 08:45 and is filed under News, Reader's FAQ. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.