Question: If you have no credit, and you co-sign with a parent on a personal loan from a bank, and you pay on time for six months, how much will that help your credit score?

Answer: It helps, but because of the complicated systems that the credit bureaus use to create their formulas, it's impossible to say exactly how high your credit score will be. But just because you have a high credit score, that won't automatically translate to securing the best loans available. Here's why.

Your credit score is developed in large part from your credit report, and if you're a co-signer with only a six-month history, you aren't going to knock any lender's socks off. You certainly may be offered a small loan or a student credit card. But a mortgage? Doubtful--well, not without a hefty down payment and a steady job in any case.

Not that you asked, of course, and I'm not sure if a parent or a high school student or a recent college graduate is posing this question, but I would caution both moms and dads and their offspring to think very carefully before co-signing a loan. Everyone is different, of course, and maybe it will work out well for you, but there are so many things that can go bad for either party.

Look at it from the parent's perspective. If you are, say, a 20-something adult son or daughter paying the loan down every month, what happens if you lose your job, and your parent has to shoulder the financial burden? Would that create a hardship for them?

And, of course, if you're just starting out, you need to consider the same thing. Not every parent, especially these days, has the best financial record or the most stable job situation. If something goes awry with your parent's finances and they are unable to help you, could this loan bring you down, just as you're starting to build your credit history?

You might also consider a secured credit card. These cards help you build your own credit history by establishing a pattern of timely payments without involving a third party.

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