Freshman Daughter's Credit Card Gone Wild

New television ads about purchasing your credit score have replaced the infamous garage band in the pirate costumes. A recent ad for a company owned by Experian teaches kids and parents the effects of cosigning for a credit card. Financial consumers have learned the hard way about the dangers of cosigning for student credit cards. Now this topic is hitting the mainstream airways.

Parents and kids should begin the process of learning about money and credit at an early age. By building strong values about money early in childhood, parents can arm their kids with the right tools and knowledge so they understand the importance of making smart financial decisions when they leave for college.

Survey Reveals Large Percent Of Cosigners
Experian Consumer Direct, a division of Experian, one of the three major credit bureaus, conducted a survey on cosigning for credit cards and loans. The findings indicate that consumers are not fully knowledgable about the pros and cons of cosigning. For example, about 30 percent of survey respondents ages 18 to 24 were not aware that both the primary borrower and the cosigner are equally responsible for paying credit card bills, mortgage payments or rent.

Additional findings from the survey include:
40 percent of survey respondents said they had cosigned for a variety of specific loans and lines of credit (i.e., car loan, mortgage, etc.) for someone.
About 30 percent of survey respondents said that they had someone cosign for a variety of specific loans and lines of credit (i.e., car loan, mortgage, etc.) for them.
Nearly 20 percent of 18 to 24 year olds adults have cosigned for someone.
1 out of 3 respondents ages 45 to 64 have cosigned for someone.

Freshman Daughter's Credit Card Gone Wild
The new television ad portrays a reality that many students and parents face each year as a child heads off to college. The spot depicts a daughter headed into her first year of college. As many parents do, they cosigned for a credit card. Yet, soon after purchasing school supplies, she was using the credit card to for all kinds of luxuries while failing to pay the bill. The ad's lesson is this; if you are cosigning for something to benefit a family member, you must ensure that you are monitoring all transactions for that person because cosigning for a financially irresponsible family member can negatively impact your credit score.

Tip To CoSign And Control Payments
There are ways to protect yourself from credit doom if you choose to cosign a credit card or other loan for someone. A tip for cosigner is to control payments; you must do this if you take this leap of faith. However, once you become a cosigner, there is hardly a way out so make sure before you commit. Remember, there is a reason someone is approaching you for help as a cosigner; it means they were turned down for credit on their own. If it's a bad risk in the eyes of a lender, it is probably a bad risk for you too.