Personal Finance Advice: Avoid Mixing Credit

Do you share your finances with someone? People in serious relationships often merge finances, and sometimes there comes a time when an adult child has to take over finances for an aging parent, but these aren’t the only two ways that you might find your finances mingling with someone else’s.

As a matter of fact, unless you know what you’re getting yourself into beforehand you might find yourself combining finances with someone who you never, ever intended on mingling money with.

It’s one thing to make a concerted effort to combine finances with the person you marry, but it’s another thing entirely to find yourself partnered with a friend or family member when it’s not what you really wanted.

“Will you co-sign for me?” Co-signing involves putting your credit on the line to vouch for someone else.  Essentially, it means that the person can’t qualify for a loan or credit card on his or her own, so you co-sign to say “Yes, I’ll vouch for this person, and if you don’t get payment then you can come get it from me.”  Obviously, co-signing isn’t something that you do as a nice gesture and then forget about it.  You might actually wind up making the payments if your friend or family member doesn’t.

In other words, the account isn’t just one that you co-sign on; it actually becomes partially your account.  If the person you co-sign for gets fired, winds up in the hospital, or unexpectedly becomes a shiftless layabout, it becomes more than a shame that he or she can’t pay the bills.  It becomes your problem because you are just as liable for the payments as the primary account holder.

“Can I become an authorized user on your account?”  Imagine you’re dating a guy who happens to have pretty rotten credit.  He can’t get a credit card that doesn’t feature a really high interest rate, but you have decent credit so you don’t have any problems with acquiring a reasonable credit card.  One day this guy you’re dating gets the brilliant idea for you to add him as an authorized user so he can have access to a credit card with a decent interest rate.  He swears up and down that he’ll make payments promptly and he won’t rack up a ton of debt with the card.

In this situation you need to have as much sense as the credit card companies do