Are You Really Ready To Ask Someone To Co-sign For You?

by Pam on November 29, 2009

use caution before asking someone to cosign on a loan with youIt looks like you may have reached a turning point in the road. Whether it’s for an auto loan, a personal loan, or department store credit, you may not be able to qualify by your own merits. This is when the cosigner comes into play. The best place to look for a cosigner is within the family, or among friends. You’ll want to trust them just as much as they will want to trust you.

If this individual is backing your loan, they will be privy to the same credit checks as you would be if this were your loan all by itself. Their creditworthiness is based on income, homeownership, credit history, and job security. If you default on any payments, the cosigner will have to pick up the tag. That’s why it’s good to make sure that you have all of your ducks lined up in a row before you put the cosigner’s financial credit rating on the line.

Say what you mean and mean what you say!

To the cosigner, you are saying that you plan to honor the credit contract to the letter they have cosigned for. Don’t try to take on too much new credit at first. Take the time to really look at your spending habits. If you have had trouble in the recent past keeping up with your finances, this may not be the best time to put someone else in the cross hairs.

Building and managing credit is a huge responsibility. Just ask any one of the thousands of people that have low credit rating scores. These people started out in good faith. They had every intent of making sure their payments would be complete and on time. However, things often happen beyond anyone’s control and those things that happen are events that can often send a good credit rating south for much longer than just the winter.

Put aside a little money each month to cover the loan repayment and make it a priority. Protect the person who cosigned as if he or she were you. Remember that the reason you needed them in the first place was because you couldn’t qualify on you own merits. That doesn’t make you a bad person in the least. It just means that it may take a while before the system deems you credit worthy and until that happens, make sure you have the cosigner’s best interest at heart.

About the Author

Liz Roberts is a loan consultant with New Horizon Finance, specializing in bad credit,& has been providing consumers & business owners with financing since 1989.  Join Experian Triple Advantage at http://www.newhorizon.org & get a free credit report & credit score.

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