… co-sign for a car loan. Sure, your freshly minted college grad might need a car to get to the new job. But don’t reflexively think it’s your job to co-sign for a car loan. If your grad flakes on the payments that means you are on the hook. And don’t think they will learn a hard lesson if the car is repo’d. You’ll take the hit as well: it’s going to show up as a major ding on your credit file.
Encourage your grad to shop for a less expensive car-new or used-that they can qualify for financing on their own.
… co-sign for an unsecured credit card. Sure, this one is unsecured debt, but it’s still got the potential to screw up your finances. The credit card issuer—or the debt collection firm that buys the account—can and will come after you for payment.
If your grad can’t land a card on her own, then encourage her to shop for a secured credit card that reports transactions to one of the three major credit bureaus. With a secured card the holder will need to fork over a deposit—that’s the secured part-and charges are limited to that sum. It’s credit on training wheels. The idea is for the grad to spend six months to a year being a payment angel on this card to start building a solid credit report. Then it will be no problem to graduate into a regular credit card; in fact, chances are offers will start pouring in once that payment history on the secured card is established.
Now about the deposit: if your grad can’t navigate this speed bump, go ahead and chip in. Up to you whether you want to make it a gift or a loan.