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Credit Advice
Topics addressed on December 22, 2010:
Cosigning mortgage for daughter can impede access to future credit
Dear Experian,
I cosigned on a mortgage loan for my daughter. My credit report shows this as my mortgage, even though I am not making payments. Does this reflect on my credit if I want to take out a loan in the future? And if it does, what can I do about it?
- ZIM
Dear ZIM,
It is your mortgage. By cosigning for your daughter you agreed to take full responsibility for the debt if she did not or could not make the payments. Therefore, it will appear on your credit report and may influence lenders’ decisions regarding future loan applications.
There are only two ways to have the mortgage removed. The first option is for your daughter to refinance the loan and qualify individually. That would remove your responsibility for the debt. If she does not qualify as an individual borrower, that may not be possible.
A second option is to pay off the mortgage in full. I assume that is not a possibility.
If you cannot refinance the mortgage or pay it in full, the account and its payment history will be reported in your name. It will be essential for you to ensure every payment is made on time and in full to protect your credit references.
Yours is a perfect example of why the decision to cosign a loan for anyone, including your children, should be taken very seriously.
Thanks for asking.
- The "Ask Experian" team