What is a Cosigner?
some loan and credit applicants cannot obtain financing. In this circumstance, a cosigner is obligatory to qualify for a mortgage, auto loan, or other credit. The responsibility of a cosigner is straightforward, but risky. Cosigners normally have good credit history, in which they can serve as a guarantor for someone else’s debt.
A cosigner is a person who can legally sign loan papers or documentation with another person who is having difficulty obtaining a loan, or sometimes getting a lease for an apartment or rental unit. As a cosigner, the person makes a legal agreement to be jointly responsible for repayment of the loan should the first signer fail to pay debts in a timely fashion. This is extremely important to understand for anyone who would cosign on documents. They risk their credit and their own financial status if the person who asked them to cosign does not meet his/her financial obligations. Moreover, sometimes when you cosign for a loan, it may impact your ability to obtain loans for yourself, since remaining unpaid debt may be considered “bad credit.” With this proviso in place, it is important to state that there are many times if you have an impeccable credit history, where you cosigning on a loan could help someone else out. Parents or close family members may especially receive requests to be
This refers to a person who will take responsibility for a loan should the primary borrower fail to pay. Cosigners often include a parent, spouse, close friend, or family member. Stafford Loans do not require cosigners. PLUS Loans do not initially require a cosigner, but if the application is rejected due to a poor credit history, the parent may reapply with a creditworthy cosigner. Some alternative loans require a creditworthy cosigner on the initial application.
