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The Curious Bag
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<h4 class="dechead">On One Hand: Benefits of Having a Cosigner
A cosigner will sign loan documents that will assign responsibility to that individual in the event the primary borrower defaults. This will allow the loan to be reported to both the primary and cosigner's credit reports. As long as the loan remains current, both credit reports will reflect an account in good standing and will improve poor credit.
On the Other: Drawbacks of Being A Cosigner
If the loan falls behind or defaults, both credit reports will reflect the negative information and credit ratings will drop. Also, the cosigner will then have to begin paying the note.
Bottom Line
Having a cosigner is a good way to build credit for individuals that have little to no history as well as help to rebuild credit if the primary borrower has had credit problems in the past. Being a cosigner will help establish or reestablish credit for individuals who have little or poor credit as long as the primary borrower keeps the loan current. Cosigners should be sure they are able to pay the loan if the primary borrower defaults.
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