4. Don’t cosign a loan

While it might seem heartless, cosigning a loan could spell trouble down the road. When you add your name to someone else’s loan, you’re on the hook if that person doesn’t pay up. Do you really want that kind of responsibility hanging over you?

Besides the responsibility, also know cosigning a loan will increase your debt-to-income ratio. You could also end up ruining your credit if the other person consistently makes late payments or skips payments. Because a cosigned loan appears on your credit report, you might want to do yourself a favor and avoid this potentially disastrous situation at all costs.

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