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Topics addressed on June 10, 2009:
Be very cautious about cosigning your girlfriend’s or boyfriend’s lease
I am thinking about cosigning an apartment lease for my girlfriend. I would not live there. I know that if she makes a late payment or doesn't pay that I will be responsible for the lease payments and that it will show on my credit report. But, will the simple fact that I am a cosigner show up on my credit report if I want to apply for a loan or mortgage for myself? Assuming she pays as agreed will cosigning affect my credit score?
Be very cautious about co-signing a lease with your girlfriend. If it were reversed I would tell her the same thing about cosigning for her boyfriend. Doing so puts you at huge financial risk.
You are correct that if she doesn’t pay the rent, you will be responsible for the entire amount. While installment loans or other types of co-signed debt would appear on your credit report, a lease probably won’t appear on your credit report as long as it is paid on time. But, if she fails to pay, it will almost certainly appear as a collection account.
A collection account would wreck your credit report and credit scores.
I certainly hope your relationship remains happy and that it lasts, but if not, you don’t want to be stuck with an unpaid lease and a seriously damaged credit report.
Now might be a good time to have a personal finance date. Print your credit reports. Order dinner delivered, and sit down at the table and share them with each other.
If hers is loaded with late payments, charged off accounts or collections, you almost certainly shouldn’t cosign the lease. If she has had trouble paying her other debts, she’s likely to have trouble paying the lease, too.
Financial stress is one of the most common sources of trouble couples face, so it’s important that you understand and can agree on how each of you approaches spending and saving. It is one area where there should be no secrets! Dealing with personal financial issues early in the relationship can help make it stronger over the long term.
Thanks for asking.
- The "Ask Experian" team