Someone else's debt
Here's something you might not know: When you co-sign on the dotted line to help someone else get a loan or a card, that entire debt goes on your credit report.
While the fact you've co-signed is neither good nor bad, it does mean that -- as far as any potential lenders are concerned -- you're carrying that debt yourself. And it will be included in your existing debt load when you apply for a home mortgage, credit card or any other form of credit, says Ulzheimer.
And if the person you co-signed for stops paying, pays late or misses payments, that bad behavior will likely go on your credit report.
So when someone tells you that co-signing is painless because you'll never have to part with a dime, you can tell them that's not true. Co-signing means agreeing not only to repay the obligation if necessary, but also to allow the debt -- and any nonpayment -- to count against you the next time you apply for credit yourself.
Co-signing for a friend or family member "plays well at the Thanksgiving table, but it doesn't play well in the underwriting office," says Ulzheimer.