The card issuer may react by suspending the card’s credit line, canceling the card or closing the account at renewal time.
Any of those moves could hurt the cardholder’s credit scores.
Another often-overlooked threat to a credit score is co-signing for a loan.
Besides being on the hook for the money in the event of a default, co-signers will see their credit scores dip the moment they sign and likely plunge if any payments are late.
The entire debt also goes on co-signers’ credit reports, which counts against them if they apply for a mortgage or other form of credit.
“It’s almost like an afterthought that some people willingly put their name on a contract and not really think through what they have just done,” Ulzheimer said. “When you co-sign for a loan, you might as well be applying for it on your own. The impact is really no different.”
Co-signing also could lead to some uncomfortable personal moments.
“It can be very awkward at holiday dinners if a relative across from you defaulted on a loan that you co-signed for,” he said.
©2014 Pittsburgh Post-Gazette
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