When gearing up to make a big purchase like buying a new car or getting a new house, most individuals will require financial assistance through a loan.
However, obtaining a loan can be challenging, especially for those with limited credit history, low credit scores, or not enough income. In this case, a co-signer may be able to help by taking joint responsibility for the loan and offering their credit history to strengthen the borrower’s approval chances and loan terms.
Being a co-signer is a significant commitment and carries both risks and responsibilities. The co-signer is a person who agrees to be legally responsible to pay a debt if the borrower does not pay back a loan as agreed. They are equally liable for the loan, meaning if the borrower fails to make payments, the co-signer is responsible for repaying them. It is also tied to the co-signer’s credit, so any implications such as a late or missed payment can have adverse effects on a credit score.
If you become a co-signer, you agree to someone else’s debt, but you don’t necessarily get any title or ownership rights to the property. It’s also important to consider your future credit needs. Your liability for the co-signed loan may keep you from getting other credit since creditors will consider the co-signed loan as one of your financial obligations.
Common types of loans that can be co-signed:
If asked to be a co-signer or if you’re asking someone to co-sign, think carefully about the risks and responsibilities required before going into debt together.
Do you have colorful credit?
Noble Credit Union may be able to help! The first step is to apply for your loan and see where you stand.