A cosigner is an additional person who signs a loan document and takes equal responsibility for the debt. Borrowers may want to use a cosigner if their credit or financial situation is not good enough to qualify for a loan on their own. Also, some borrowers may not earn enough to qualify for a loan, even if they are otherwise in good financial shape.
In such cases where the principal borrower may not qualify alone, having a cosigner may be necessary to get loan approval. Having a cosigner can also make a big difference in terms of getting the most competitive rates and terms on the loan.
A cosigner is legally responsible for the loan and the shared account will appear on his or her credit report. Having a co-signer is only helpful if the co-signer’s credit or financial standing is better than the primary borrower.
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