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Is co-signing ever a good idea?

Happy Friday everyone! I'm wondering if anyone has experience with co-signing. Have you ever been burned by co-signing a loan for someone? Or have you co-signed and had everything work out fine?

This week, I answered a letter from a mom whose 25-year-old daughter just started working. Her daughter wants her to co-sign for an $800,000 home. Yikes!

I usually tell people not to co-sign because I've heard so many horror stories from people whose great credit was destroyed because they tried to help a loved one.

On the flip side, every so often, I get a letter from someone telling me about a time when co-signing worked out. For example, another mom recently wrote me to say that her 22-year-old son was buying a used car. He had no credit history and would have paid over 20% interest. She co-signed, he got a lower interest rate, and he made all the payments as agreed. I'm sure there are lots of stories like this. I just don't hear that many of them because most people don't write an advice columnist to say that everything's going great.

I think when co-signing makes sense is when you're doing it for someone who lacks a credit history. But when the person has a terrible credit history, I'd be extremely cautious.

What does everyone think: Is co-signing ever a good idea?

Robin Hartill aka Dear Penny is a certified financial planner and a senior writer at The Penny Hoarder.

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