Credit and Co-signing Advice

I want to share a little advice that I think is one of the most important things in the Real Estate and credit game. As I have said in previous posts, credit is the most important thing when it comes to Real Estate finance. One of the biggest mistakes I see people making is with "Co-signing". What Co-signing entails is you signing for a loan, mortgage, auto, or other, with someone else, using your credit as a supplement to the primary borrower. The word co-signer doesn't really play in the Real Estate game, but is very common with Auto finance. When you co-sign, what you are basically saying is that I will vouch for this person, and that you will get all payments ontime and in full. What this does is put this liability on your credit report. This can be good because it builds your credit but can really hurt you if things go bad.
What can happen? (and does)
You co-sign for your brother or sister so they can buy a car. Brother or sister makes the payments for a while, but then has some issues and can't keep up the payment. (what payments come first, food and rent, or car payment? You know the answer) Brother and sister keeps missing payments, maybe gets caught up from time to time, but overall, doesn't keep a regular payment history.
How does this effect you?
Dearly.....You now have your perfect history, tarnished by their history for the entire term of this loan. This is a huge problem. With Real Estate finance, the difference between a clean credit history and a score of "720" is a huge difference from a "600". You are talking hundreds of dollars per month.
How do you avoid the issues that can arise with co-signing?
The obvious way, is just say "NO" like the old drug public service announcements. Another way, is to make the payments yourself. Arrange for you to pay the payment, and make sure that there is no risk. Have your brother, sister, aunt, whoever, make payments directly to you, and then your only risk is that you don't get the money from your sister, aunt, cousin. Should that happen, you now have put your financial situation at risk, not having the extra cash, and you can force them to sell the car for not paying.
Make good credit decisions, if you don't, it WILL cost you.