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Millennials rely on Mom and Dad to co-sign loans

A new survey shows that two-thirds of millennials have used a co-signer.

By MSN Money Partner Apr 1, 2014 1:17PM

This post comes from Krystal Steinmetz at partner site Money Talks News.

Money Talks News on MSN MoneyThank goodness for parents. That's the word from the millennial generation, which often relies on Mom and Dad to co-sign for everything from student loans and car loans to residential leases and credit cards.

Person signing document © Eric Audras, PhotoAlto, Alamy

According to a new report from Experian, two-thirds of millennials, made up of those born between the late 1970s and mid-1990s, have used a co-signer at some point, most often relying on their parents.

Ken Chaplin, senior vice president of marketing for Experian Consumer Services, said:

Since the co-signer guarantees the person for whom they are co-signing will repay the debt on time and in full, it's important that both parties understand repayment expectations and communicate guidelines so they can be confident in their credit decisions.
An estimated 8 percent of millennials either fall behind on payments or default on loans, putting them in bad standing. This leaves the co-signer on the hook to pay the debt, and can leave a lasting mark on them and their credit. Here's how co-signers have managed things to this point:
  • 32 percent of co-signers made payments when the primary signer wasn’t able to.
  • A shocking 17 percent of co-signers didn't find out about the late or missed payments right away.
  • In 12 percent of cases with late payments or default, the co-signers' credit score took a hit.

We've said it before, and we'll say it again: Co-signing is not a good idea, even if you're trying to help out your child. The risks -- responsibility for debt, potential credit rating hit and limited borrowing power -- are things you should consider before signing anything.

Fellow millennials, if you can't get a loan or apartment on your own, maybe you should just accept it, move on and claim your financial independence.

Are you surprised by the statistics?

More from Money Talks News

Apr 2, 2014 12:35PM
We spend so much time and money trying to teach about diversity, and how there is no such thing as gender. Most college professors, and many high school teachers spend more time on their soapbox talking about civil liberties than they do teaching our kids anything that will prepare them for life. 

We tell our youth that everyone is special and everyone is entitled to all that they could want from life. We make kids think there is no such thing as legitimate suffering, and that stress is something that shouldn't be part of your life. We turn them into narcissistic, entitled individuals. 

I hope this changes by the next generation. Basic personal finance is far more important than a liberal arts credit. Many of these people know less about how to manage their own bank account than they do about art history. 

I have nothing against broadening your horizons, and opening your mind. But learn how to do that after you have learned that 21% interest on a credit card is a bad way to buy new clothes. 
Apr 2, 2014 10:04AM
didn't we used to call the millennial the Slacker generation?  what happened to that well targeted title? 
Apr 2, 2014 10:59AM

This is news?  8% estimated?    That's nothing.   6% was the general foreclosure rate in January for all age groups...  

Where are the jobs?  Credit markets are only as good as available  employment.

Apr 2, 2014 12:20PM
LOL never going to happen in this house.
Apr 2, 2014 1:42PM
"Fellow millennials, if you can't get a loan or apartment on your own, maybe you should just accept it, move on and claim your financial independence."

Maybe you should accept the FACT that after the Massive Push of Right to Work Harder for far Less PUSH sweeping across America and the World, most folk these days can't find good Jobs to pay for the overpriced Products Corporations are making Record Income and Profits from.

Maybe you should also accept that Credit Scores are being used to gouge folks so that their already limited Income base erodes even more. Folks always talk about financial Independence and forget about Too Big to Fail and Too Big to Jail. Folks always talk about financial responsibility yet have not a freaking clue to what's happening in the Real World.
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