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From the Experts at

Using a Cosigner: What You Need to Know

Advertiser Disclosure by Lucy Lazarony

Using a Cosigner: What You Need to Know

Getting a credit assist from a cosigner may be necessary to qualify for the credit you are looking for. You may need a cosigner when applying for credit if:

  • You don’t meet the minimum income requirements for a loan.
  • You have no established credit.
  • You have bad credit.
  • You meet the minimum income requirements but your debt-to-income ratio is too high.
  • You are self-employed.
  • You changed jobs recently or your income is variable.

Applying for credit with a cosigner may help you secure private student loans, credit cards and even mortgages that you wouldn’t be able to qualify for on your own.

Try reaching out to a trusted friend or family member with a good credit history and a solid income history as a potential cosigner.

Being Responsible With Your Loan

It’s very important to manage a cosigned account wisely. Pay your account as agreed each and every month.  Remember, a cosigner is doing you a favor, and if you should fall behind on payments and the account becomes delinquent, the delinquency will show up on your cosigner’s credit report as well as your own.

Not to mention that your friend or family member who cosigned for the loan will be held legally responsible for the debt that you are unable to pay.

So take a close look at your finances before asking for a cosigner for help with a loan. Do you have the income to easily meet the loan payments each month and for the length of the loan?  Assess your work situation. Do you expect to be working at the same job a year or two from now?  How difficult will it be for you to get another job if you need one?

Remember your cosigner’s credit record is on the line as well as your own.

So only apply for a loan with payments that you feel you can manage responsibly. Make paying a cosigned loan a priority in your budget.

How Cosigned Loans Can Help

Paying a cosigned loan as agreed will help you to build a good payment history, which will give your credit score a lift.

You can monitor your credit score as you pay off a cosigned loan with’s free credit tools. You will receive a free credit score, which is updated monthly, as well as expert advice on improving your credit.

If you manage your cosigned loan payments responsibly, you can reap the benefits and watch your credit score climb over time.

[Offer: Is bad credit holding you back? The credit professionals at our partner Lexington Law may be able to help. They have a team of attorneys that are there to help you improve your credit by getting inaccurate, negative items removed. Their team can also help you understand your credit score and leverage your rights to help ensure that you have a fair, accurate and substantiated credit report. Get started today or call them at (844) 346-3295 for a free consultation.]

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  • Betty

    I put in a down payemnt and gave a trade in and drove the car home I have had the car 3 weeks and now they day I need a co signer even though I have a contract signed 3 weeks ago with out one. What now.

  • Betty

    I meant the dealership now says I need a co signer

    • Credit Experts

      Betty —
      How frustrating. It sounds as if you have a couple of options. One is to find financing elsewhere (outside the dealership). One is to get a co-signer. And another is to tell them you cannot get a co-signer and ask what your options are. Your contract may well have some fine print involving final approval and possible changes in loan terms. You can read more about rescinded loan approvals here:
      Help! I Just Bought a New Car & Then Was Denied for the Loan

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  • Meet Our Expert

    lucy_lazarony GravatarLucy Lazarony is a freelance personal finance writer. Her articles have been featured on Bankrate, MoneyRates, MSN Money, and The National Endowment for Financial Education. Prior to freelancing, she worked as a staff writer for Bankrate for seven years. She earned a bachelor's degree in journalism from the University of Florida and spent a summer as an international intern at Richmond, The American International University in London. She lives in South Florida.
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