If you have children and/or grandchildren, chances are that they may ask you to co-sign a loan for them. A co-signed loan is required in instances where borrowers may be on the "border" in terms of creditworthiness. Your credit union may be able to offer the loan (either outright or at a lower rate of interest) only if they are able to obtain the co-signature of a creditworthy friend or relative.

You need to weigh the pros and cons. A co-signature on a loan makes you liable for the loan if the borrower defaults. It's just as though you yourself had been granted the loan and are responsible for it. On the plus side, you will have the joy of seeing your children or grandchildren achieve their goals and win their goodwill for your generous act. On the downside, however, co-signing a loan can put you at risk and have an adverse effect on your own ability to obtain a loan if you should need one. Being a co-signer on someone else's loan is one of the factors lenders use in determining whether to grant credit. And should your children or grandchildren default on the loan, bad feelings between parties will inevitably follow.

Is it worth the risk? Only you can decide. If you are asked to be a co-signer, Credit Unions Online doesn't want you to make a snap decision. Think the matter through carefully. Ask your children or grandchildren if the money is really needed and whether they honestly feel they have the means to pay it back. Then, base your decision with a measure of compassion but mostly on how a possible default will affect you financially.