Cosigner
A cosigner is an individual who agrees to take responsibility for a loan or financial obligation alongside the primary borrower. The cosigner’s Creditworthiness can enhance the likelihood of loan approval, particularly for borrowers with limited Credit history or lower Credit-score/">Credit Scores. The cosigner is equally liable for repayment, meaning that if the primary borrower defaults, the lender can pursue the cosigner for payment.
Examples:
- Student Loans: A parent may cosign a student loan for their child to help them secure funding for college.
- Auto Loans: A friend with a strong Credit history may cosign an auto loan for someone who has just started building Credit.
Cases:
- Default Scenario: If a primary borrower fails to make payments on a car loan, the lender can demand payment from the cosigner, impacting their Credit-score/">Credit Score.
- Positive Impact: A cosigned mortgage can enable a couple to buy a home when one partner has insufficient Credit history, benefiting both by building Credit together.