If millennials are going to achieve financial independence, a good first step might be to stop relying on parents to cosign loans.
Nearly two-thirds of millennials have needed a cosigner, usually mom and dad, when buying a car, getting a credit card or renting an apartment, according to a new report.
More than one-third of parents cosigned student loans for their millennial children, according to data from Experian Consumer Services.
That’s all well and good if millennials repay the debt themselves. Most did so, but 8% of millennials fell behind on payments or defaulted, according to Experian.
In those situations, 32% of cosigners had to step in and make payments and 7% of cosigners took on debts themselves when millennials defaulted.
Perhaps more troubling, 17% of cosigners did not find out about the credit problems right away, according to Experian. And 12% of cosigners suffered dented credit scores themselves.
“Since the cosigner guarantees the person for whom they are cosigning will repay the debt on time and in full, it’s important that both parties understand repayment expectations and communicate guidelines so they can be confident in their credit decisions,” said Ken Chaplin, Experian senior vice president of marketing.
Though definitions vary, the millennial generation broadly encompasses people born between 1977 and 1992 (ages 22 to 37).
Follow Walter Hamilton on Twitter @LATwalter