As a borrower, co-signing is wonderful. You may want to buy a house or a car, but find yourself unable to get the funds you need. If your credit is poor or your debt to income ratios are not strong enough, lenders won’t give you money.
Finding a co-signer gets you the borrowing strength you need. Your co-signer vouches for the loan and assures the lender that the loan will get paid off as agreed. If your co-signer has good credit or high income, the lender knows that the loan is likely to be repaid.
Finding a Co-Signer
Who can you use as a co-signer? You should generally start with the three F’s: Friends, Family, and Fools. You’ll need somebody who will take an interest in your cause. They’re taking a risk, so you can’t expect everybody you know to co-sign for you – they may not be able to afford the risk to themselves and their family. Your parents may want to help you get started with credit, your friends may want to give you a hand, or another person may believe you can pay off the loan if you can just get it.
After You Get the Loan
Once you find a co-signer, you need to be responsible. This person is doing you a huge favor. They’ve made something possible for you that you could not make possible on your own – don’t let them down. If you fail to pay on the loan as agreed, your co-signer’s credit will suffer (and yours will too). To understand the risks they’ve taken in order to help you, see How Co-Signing a Loan Works.
