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Credit tips for retirees and empty nesters

Nix the co-signing
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Nix the co-signing

What you may not realize: If you co-sign for a card or loan, it’s added to your credit report just as if it's yours. And that debt is included in your debt load if you apply for credit or a mortgage.

It can also sink your credit score. When you're using a higher percentage of your available credit, your score can go down. If you have $10,000 in available credit on your credit cards and charge $1,000 total on your cards, your utilization ratio will be 10 percent. Staying under that utilization ratio is optimum for a good credit score. However, if your adult child maxes out that co-signed card at $5,000, you're now using 40 percent of your overall available credit. And your score would likely drop.

You're also on the hook for the debt if the borrower defaults.

"I am not a fan of co-signing under almost any circumstances," says John Ulzheimer, formerly of FICO, and president of consumer education for For empty nesters and retirees, it can be especially detrimental, he says. On a fixed income, "co-signing for a loan is like having a piano dangling on a string over your head," he says.




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