Co-signing on a kid's apartment lease?

In My Humble Opinion
1

Hello,

My son is currently looking for work, and plans to move out with a roommate. I am waiting for the inevitable question of co-signing on the lease. He will be in a new job, and it will be his first rental. The roommate does not have involved parents, so their co-signing won’t be an option.

I understand the financial risk of co-signing—I could end up paying off a lease! What I don’t know, is how this will affect my wife’s and my credit rating. We are currently renting a house. We plan to buy a house sometime within the next 12 months. Will co-signing for an apartment lease have the same sort of impact on the “available credit” or “outstanding loans” section of our credit report as something like co-signing on a car loan?

Any thoughts would be helpful.

2

A lease won’t affect your credit rating at all. It’s not a debt, and isn’t reported to credit bureaus.

3

I don’t think I’d worry too much about it unless he actually asks. Neither my husband or I had to have someone co-sign for either of our first apartments, so it might not be as inevitable as you think.

4

Thank you for the great answers friedo and Vihaga. Friedo, you set my mind at ease.

5

Seconded.
Have you pulled any of your 3 free credit reports from annualcreditreport.com yet this year? I’d pull one to see what’s on there more than 6 months before applying for a mortgage where I yourself. That will give you time to get wrong items removed w/o them popping up to worry you later in the process.

6

It affected my credit rating. I co-signed on a loan for my son, who made every payment on time, though he started out with a less-than-stellar credit rating. Mine was stellar (my landlord checked it before I could sign a lease). I am no longer co-signed (he had paid down enough where they didn’t need my signature). When I took out a loan to finance my truck purchase a few months ago, they said something about how my credit rating was improving. I asked why it had to approve, since it was so high three years ago. They said the simple fact that I co-signed on another person’s loan brings it down.

7

A loan is not a lease.

8

Watch a few episodes of “Judge Judy” to get the downside of co-signing anything for anyone. :slight_smile:

One thing I would very leery of is co-signing a lease that has more than your son living in the place; you know him, and you have options with him, but any other roommates are an X factor that would make it something that I simply wouldn’t do.

9

Second the advice to watch “Judge Judy.”

When my son and his GF decided to rent a place together, I had a serious talk with the boy. I explained to him what the financial commitment meant, and he was literally STUCK there for the life of the lease.

I then got blunt: Okay let’s say you two decide that it’s not gonna work out. Can YOU afford the whole rent payment by yourself?

Let’s face it, on a one bedroom apartment, you’re not gonna find a roommate!

Apparently, that was a theoretical situation he had actually considered! And he said yes, it would be tight, but he could pay it solo.

Son and GF recently bought their own HOUSE, and are getting married in May! Sometimes it DOES work out!

Too many times, though, it doesn’t.

Two friends sharing an apartment don’t have the same emotional commitment that a BF/GF. ASK your son if they have truly discussed what sharing a home means! Who will clean? How will the bills get paid? Who buys food? If each buys his own food, will they agree to stay OUT of the other guy’s food? Who buys toilet paper? Do they have a vacuum? (Young men are pigs. TWO young men are a barnyard!) Will they take turns taking out the trash?

Just because they both like the same music doesn’t mean it’s a match made in heaven!

Another thing: if this will be your son’s FIRST job, you will have to explain to him about taxes and Social Security and all the other crap that will be taken out of his check. The very first paycheck of a young adult always gives me comedic relief. “WHERE DID ALL MY MONEY GO?”

A kid figures, I’m making ten bucks an hour, I work a 40-hour week, my check will be $400.

Uh huh. If those two sign a lease on an $800/mo apartment, and each one is supposed to pay $400 a month just for rent, a ten dollar an hour job won’t cut it.
~VOW

10

Your point?

11

Simply put, your anecdote is irrelevant. A lease is nothing like a loan.

12

Also keep in mind that cosigning isn’t as necessary as a landlord might lead you to believe. When I first came to NYC I was signing my lease and they asked who would be cosigning for me. I simply raised an eyebrow and said, “No one. I’m an adult.” as though they had asked who would be coming by to cut my meat for me. They just said, “Okay” and never mentioned it again.

13

Even out of high school with zero credit I never had to have a co-signer for an apt. lease. Perhaps things have changed, but as long as I could come up with first, last and security it was never an issue.

14

A loan immediately goes onto your credit report as a debt you owe. And part of your credit score depends on how much debt load you’re currently carrying - creditors are less likely to lend you money if you’re carrying more debt than they think you can handle, even if some of the debt is co-signing someone else’s loan. Whereas a lease, at worst, shows up as a hard credit check on your report, as long as the lessee keeps paying the rent. It doesn’t show up as a debt.

15

Thanks to everyone for the replies. My main concern was that this would show up like a loan on our credit report. As long as the payments get made, it doesn’t look like this will be an issue. If we have to step in and make some payments…well, that’s the risk we know about.

As I said in my post, the question hasn’t even come up yet. I just wanted to understand the implications. We may decide to co-sign on a 6-month lease, if the next 6-month won’t require a co-signer. Better yet, he may find something that won’t require a co-signer. Either way, we won’t be signing on anything he can’t pay by himself if things go poorly with the roommate. This is going to make his accommodations pretty modest.

Thank you again for all the input!

16

BTW, if you’re looking to improve your credit score 12 months from now, you might want to look into opening a new line of credit, perhaps a HELOC or credit card. It’ll hurt you for 6 months, but then it falls off of your report and you’re left with a higher available balance. The access to credit helps your score (“Well, if other creditors trust this guy…”) and it’ll make your current balance look smaller (“And look, he’s got a low utilization, so he’ll have room in the budget to pay us.”) So you might want to think about it if you intend to get a mortgage in 7-12 months.

17

I’ve been living on my own for 25 years or so and have never once needed a cosigner for an apartment lease.

Once, as I was filling out the application, the apartment manager requested my mom’s name and phone number. “Why do you need this?” She said it was in case I couldn’t pay the rent, and then they’d contact my mommy. I looked at her like she had horns growing out of her head. I was 27 years old, employed full-time, and had never once needed to rely on Mommy and Daddy to make the rent – and that includes the four years when I was in college (which was also paid for out of my own resources). At first I refused to give her the information, so she threatened to not rent to me. So I wrote “Marie Antoinette” and put down a made-up phone number. And proceeded to live there for the next two years without anyone ever having to call Marie Antoinette to collect my rent. :cool:

18

I just recently cosigned an apartment lease for my eldest son. I did so pretty much expecting I will have to fork over some money at some point. (That yet remains to be seen.)

I never once thought about my credit rating. I’ve always assumed that as long as I pay my bills; no big deal.

But then again, I’m already a home owner. Credit issues hasn’t really been a concern of mine for a long time. I might be in the market for a new truck soon but I can’t imagine cosigning for an apartment would hurt me. At least I hope not.

19

But you might miss out on a sweet experience like we had last June when we bought the Mustang - having the salesman run our credit, and his eyes bugging out when he saw our credit rating. He said it was the second highest rating he had ever seen.

(I’m going to stop bragging about that someday, but not just yet.) :slight_smile:

20

I’ve had that experience twice; once when obtaining the mortgage for my house and just a couple months ago when I moved my money from a bank to a credit union. The credit union lady was all :eek: nice!

And yes. It’s friggin’ sweet.