My family wants me to co-sign a loan, or I’m thinking of adding my child to my credit card — what should I know first?

Three pages in this library are cited here. Only co-sign what you could pay yourself is for the person who has been asked to put their name on someone else’s loan. Add a child to a card you pay in full is for the parent weighing whether to put a child on their own credit card; it is written about a child, so a relative who is an adult is not covered by it. Add up the whole loan, not the monthly payment is the sum to do first when a loan is offered at a monthly figure you could just about manage, and it carries a line about co-signing. The first two are US pages, and so is the third. In the UK, the person who co-signs is called a guarantor.

Co-signing makes you personally responsible for the whole loan, so sign only if you could pay all of it yourself and could live with not getting it back. Only co-sign what you could pay yourself starts from the picture of someone you care about who has found a car, a flat or a loan they cannot get alone. The lender wants a second name, and it can sound like a small favour. Some people say it is not an endorsement of the person but a legal guarantee, and many people say that means a promise to pay all of it. Many people say there is no partial share. The US Federal Trade Commission, the consumer-protection agency, says so in the notice a lender must give a co-signer: you may have to pay up to the full amount if the borrower does not, with late fees or collection costs on top. It adds that the lender can collect from you without first trying to collect from the borrower, using the same methods, such as suing you or garnishing your wages. Some people warn that lenders go after the co-signer first, because the co-signer has the better credit; the FTC’s notice says the lender is allowed to. Some states have protections of their own, and the FTC suggests looking up yours.

The credit side comes with it. Some people warn that a default or a collection account damages the co-signer’s credit score and can follow you into renting, jobs and borrowing; the FTC says a default can become part of your credit record. It also says co-signing may stop you getting credit yourself even when the borrower pays on time, because lenders treat the loan as your debt. The FTC says co-signing gives you no ownership, title or interest in what is being bought. Some people point out that even complete trust in the borrower does not shield you from job loss, illness or death.

Ask these questions before you answer. Some people suggest this test: would you lend this exact sum from your own pocket today? If the answer is no, they say, do not co-sign. Some people say to refuse if you could not carry both your own big debts, a mortgage for example, and the other person’s possible bill. The FTC suggests asking the lender what the most is that you could owe, and asking it to send you statements or tell you when a payment is missed. It also suggests asking the borrower for a budget that shows how the loan will be repaid, keeping copies of every paper, and checking your own credit reports from time to time. On a way out: the FTC says a lender might include a release option in the agreement, but that lenders are unlikely to agree to one. If you want a short exercise, the page’s is this: write down the loan amount and ask one question. If the other person never paid a cent, could you pay all of it, keep your own bills paid, and live with not getting it back? If the answer is not a clear yes, you are allowed to say you cannot, and you do not have to say it today. Neither of the FTC’s two suggested steps commits you to anything.

Some people read the request itself as a signal. Some people say that needing a co-signer means a professional lender has already looked at this person and said no, and that you are being asked to take a risk the lender would not. Some people say it matters which kind of person is asking: someone with no history whom you trust is a smaller risk than someone who has already missed payments. One person points out that having no credit history is not a bad history, since everyone starts with none.

If the borrower is your own child, people disagree. Some people say co-signing for your own child is an acceptable exception, provided you could afford the full payment. Some people say the exception stops there: even a mother or a brother can default, and it can ruin the relationship. Some people say it can build credit for a responsible child who has no credit history, if every payment is on time. One person says even a parent who co-signs may later lean on the debt as leverage, or bring it up against the child. What decides it, they say, is how reliable the person asking has been with money, and whether you see it as backing a dependent or doing a favour for an adult who is independent. The FTC’s notice to co-signers does not treat a parent any differently, and the lender can ask you for all of it.

If the loan is one sold on its monthly payment, add it up first. Add up the whole loan, not the monthly payment is about a lender who says yes at a monthly figure you could just about manage after the bank said no. Its sum is to take the monthly figure, multiply it by the number of payments, and write the total next to what you would actually receive. Some people say this is the sum the offer is built to stop you doing: the term is stretched so the monthly number looks small, and the total comes out at two or three times what you borrowed. The page’s own example, from one person’s own example: five hundred borrowed, a little over two thousand paid back. Then the second sum: the repayment plus your own rent, against what comes in. The page puts four lines above the rest, and one is for you if you are being asked to sign: do not co-sign one of these loans for anyone, however close. The others, whole: do not take a loan like this if you cannot cover its repayments and your rent and your food from the money coming in, because it adds a fixed monthly cost to a month that already does not close. If you already have one and someone is threatening you over it, under US federal debt-collection law a collector may not threaten arrest, violence, or any action they cannot legally take, and that threat can be reported to the federal consumer-protection agency or your state attorney general; the page says that line is public guidance, not people’s. If you are in the US military or a dependant, a federal law caps what consumer lenders may charge you, and a lender who does not ask is not entitled to the rate they are quoting. And if the choice tonight is this loan or the street, 211 in the US comes before either; one person says one-time rent and utility help from charities and local programmes exists and is the thing to exhaust first. That page is about lending in the US, and the rules differ elsewhere.

If you want to help without signing, there are other ways. Some people suggest buying the thing outright as a gift instead, because a gift carries none of the legal tie that a co-signature does, though they say the friendship may still fade. One person suggests asking the relative whether they actually qualify for financing on their own, or have savings, so they face their own position before you take it on.

If you say no, the cost can be real on both sides. Some people say that co-signing is itself what costs the relationship, through resentment and blame over the money. One person says refusing can damage a friendship too, and some people say they felt bitter about a parent who would not co-sign. One person says a no can bring guilt-tripping or silent treatment from the family member, which they say may hurt more than the money risk. Another person says you can turn down a parent’s request and keep the relationship, if there is mutual respect and clear talk. One person says a firm “absolutely not” leaves no wiggle room, where “sorry, I can’t” leaves some. The FTC’s notice to co-signers opens by telling you to think carefully before you agree.

If you already signed, the page is only a signpost. It does not cover how to get your name off a loan, and the FTC’s page does not either, beyond the release option above. Some people point out that handing the car back to the borrower does not take your name off the loan, and that being listed as the second signer rather than the first changes nothing about what the lender can ask of you. One person points out that if a repossessed car sells for less than the loan, the rest is still owed, and the FTC’s notice says the lender can collect the debt from you. If payments have stopped or are about to, a non-profit credit counsellor can talk it through: in the US, the National Foundation for Credit Counseling, 1-877-360-6322, whose first counselling session is free and private. In the UK, MoneyHelper, 0800 011 3797, and StepChange, 0800 138 1111, help with money and debt.

If it is your child and your own card, add them only to a card you pay in full every month, tell them you did it, and treat it as a small head start, not as their credit. Add a child to a card you pay in full is for an adult in the United States whose own card is paid on time. If you miss payments or carry a large balance, adding anyone puts your record on theirs, so skip it. An authorized user is a person whose name is on someone else’s account and who can use the card. The account holder owes the bill; FICO, the company behind a widely used credit score, says an authorized user is not legally responsible for the debt on the account. Many people say adding a child puts the card’s payment history and age on the child’s credit report, so the child starts with a record older than they are. How much that helps is where people split. FICO’s own answer is that it depends on the version of the score: in older versions an authorized user’s account counts the same as the holder’s, and in recent versions it has less impact than an account you hold yourself. Some people say they were authorized users for years and were still turned down for credit because they had no history of their own.

The history works in both directions. FICO says that if the account holder misses payments or runs high balances, the authorized user’s score can be hurt too. FICO adds the part that limits it: the authorized user is not legally responsible for the debt, and if the account has problems they can ask to be removed and the account will come off their report. Some people warn that if a parent stops paying a card with a child’s name on it, the damage to the child’s report can take years to fix. You are the one who owes what is charged. Many people suggest keeping the physical card yourself, and some people warn that a young person holding a card can run up charges that land on the account holder. Tell the child: one person warns that a young person who comes across an account they were never told about may take it for fraud and contest it, which wipes out the history it was building. Before you add anyone, ask the card company whether it reports authorized users to all three credit bureaus, and what the person you add can spend. Some people warn that authorized user accounts are not reported the same way to every bureau.

For a big loan the test is different. Some people say an authorized user account alone is not enough for a car loan or a mortgage, and that the borrower needs accounts of their own. For one kind of home loan, Fannie Mae’s lender guide agrees: for loans underwritten by hand, an account that lists the borrower only as an authorized user cannot be counted, with exceptions such as a spouse’s card or proof that the borrower paid the account alone for at least 12 months. Loans run through its automated system follow different rules.

If they cannot be added, or are not ready, the page has other starts. A person under 18 cannot sign a card contract, one person points out. After that, the US government’s consumer finance agency says a card company generally cannot issue a card to someone under 21 unless they can show their own ability to pay or an adult over 21 co-signs, and that a co-signer’s own credit is hit when the young person pays late. The agency names two ways to start without a parent’s card: a secured card, backed by cash you put in, and a credit-builder loan from a bank or credit union. If your worry is someone opening accounts in a young child’s name, the FTC says a parent can request a free credit freeze for a child under 16 to make that harder; each of the three bureaus does it separately.

If the reader is the young adult and an account was opened in your name, the federal steps are these. Call the fraud department of the company that opened it and ask them to close or freeze it. Place a free one-year fraud alert by contacting one of the three credit bureaus. Get your free credit reports at annualcreditreport.com or on 877-322-8228, and look them over. Report it at IdentityTheft.gov for a recovery plan. One person warns that confronting a parent does not by itself close an account, so check with the card company that it is closed. What to do about the person who did it is a separate choice: some people say report it and accept what follows; one person says paying it off and moving on may be better, especially if the parent is helping with college. Some people warn that reporting a parent can mean estrangement, and one person warns it may get you put out of the house; one person says to have somewhere to stay lined up first if you live with them. The page does not choose for you. If you are a young adult who lives with a parent and you are afraid of how they would react to something you found on your credit report, you do not have to act on it today. If you are ever unsafe at home, call 911 in the US or 999 in the UK. To talk to someone, call or text 988 in the US or call Samaritans free on 116 123 in the UK, and in the US the National Runaway Safeline is on 1-800-786-2929; in the UK, Childline is free on 0800 1111 for anyone under 19.

Who this is not for. If you are the one who needs a co-signer, the co-signing page is the view from the other side of the table and does not tell you how to get approved on your own. If you have already co-signed and are in trouble now, the section above is only a signpost. If your name is going on a business loan, one person warns that these are especially risky, because businesses fail and the owners can be left with the debt personally; the page does not cover them in detail. If your name is going on a lease rather than a loan, some people point out that signing a lease with someone else makes each of you responsible for all of it, and the page does not cover leases in detail. If you miss card payments or carry a large balance, adding a child is the wrong tool. If a parent or other adult already controls your money in a way that frightens you, a credit report is the smaller problem, and the numbers above are the place to start. Outside the United States the rules differ. The co-signing page says only that a UK guarantor’s duties depend on the agreement they sign, and the card page does not cover the UK. Nothing here is legal advice, and a credit counsellor or your lender is the next call.