Personal Insights: August 2019

In this newsletter, you’ll learn about co-signing a loan. You’ll also read about carbon monoxide poisoning and bad driving habits.

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LIFE

What to Know About Co-signing a Loan

Co-signing on a car, house or school loan for a loved one is a great way to help them build their credit or obtain financing. While providing support can be a very fulfilling experience, you must always be wary of the financial consequences that could arise.

The following are things you may want to consider before co-signing on a loan:

• Co-signing is a high-risk, low-reward process. Although you may see a small increase in your credit score, any missed or late payments are strikes against your credit.

• If the person misses payments on the loan, you can be liable for paying the full amount as well as any missed payments.

• Co-signing can have a large effect on your debt-to-income (DTI) ratio. Your DTI ratio is the percentage of your debt payments in comparison to your income. Having a high DTI ratio shows that you may have more debt than income, which can lower your credit score—making it harder for you to establish new lines of credit in the future.

• If you do decide to co-sign for someone, have an open conversation with them about your expectations. Discuss when the payments are due, talk through any concerns you might have and monitor the account periodically to ensure the loan is being paid adequately and in a timely manner.

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AUTO

Break These Bad Driving Habits

As drivers get more comfortable on the road, it can be easy to slip into bad driving habits. A few of the most common bad driving habits include:

• Using your phone while driving—Whether you’re texting or scrolling through your social media feeds, phones have become one of the largest driving distractions. When driving, either put your phone away to avoid any temptation, or try utilizing your phone’s “Do Not Disturb” or “Safe Driving” features to limit any noise or vibrations that could cause you to get distracted while on the road.

• Failing to signal—When merging into another lane or making a turn, it’s imperative that you signal before performing the action. Failing to do so can confuse nearby drivers, which can lead to a serious collision.

• Driving with no seat belt—Wearing your seat belt is the easiest way to stay safe when you are out on the road. According to the National Highway Traffic Safety Administration, if 90% of the U.S. population wore their seat belts, 4,200 lives would be saved every year.