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 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.
• 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.