Posted on: Nov. 06, 2016 in Car Loans, Credit, Credit Score

If you’re credit isn’t where you want it to be, or you otherwise don’t meet the requirements for a loan you need, you may consider a cosigner. A cosigner is a person who will guarantee payback of your loan if you fail to make your payments. The cosigner’s credit history, employment status, and income would all be considered when the lender decides whether or not to offer a loan, just as your personal situation would be. A lender may decide not to extend a loan to you, but with someone else backing it up, the lender may feel more comfortable.


When your credit score is low, making regularly scheduled payments on a loan can help boost it. However, many find that unless a lender is willing to take a chance, they never have the opportunity to show that they are a responsible borrower. This is particularly true of someone with no credit history who has yet to be offered the chance to build a history. By having a cosigner, the new borrower can make the payments as agreed, building up that score with every on-time payment.

It’s important to note that if the borrower defaults on the loan, meaning they do not pay it back as agreed, the cosigner will be responsible for the payments. A cosigner may also be responsible for late fees and collection fees, or be subject to wage garnishment in order to repay the loan. The regulations for cosigner repayment can vary by state, so it’s a good idea to look into this in your area before you ask someone to cosign a loan for you. Like any other borrower, a cosigner’s failure to see that a loan is repaid will cause damage to their own credit score.

If you apply for a loan of any kind, it’s important to be sure you can repay it according to the terms without delays or missed payments. If you fall behind, your credit is damaged. If you fall behind and someone cosigned the loan for you, not only does that become their responsibility to pay, but their credit will also suffer. Knowingly taking a loan you can’t pay can damage not only their score, but also your relationship with your cosigner!

Making timely payments and successfully repaying what you borrow can build a positive credit history that will help you in future endeavors. Whether it’s a trusted friend or family member, having a cosigner can be just the boost you need to secure a loan and be on your way to better financial health.

If you need auto financing but your credit is keeping you from getting approved, CreditYes can help! We can match you with a dealership in your area that will be with you every step of the way. Our service is fast and free. Fill out our secure online application and get behind the wheel of your next car today!