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How Can Having A Co-Signer Make It Easier For You To Get A Loan?

There are numerous circumstances where having a co-signer on a loan is the smart thing to do. Individuals with less than perfect credit or bad credit or little credit history can benefit from having a co-signer on a loan. Co-signers provide an added level of comfort for the organization extending credit because they know there is a higher likelihood that the loan will be repaid or the debt collected upon should something happen.

One of the first things a loan originator will do when you are trying to obtain a loan is pull up your credit report. A credit report is the best indicator of someone's ability and willingness to pay on an outstanding debt. Any kind of black marks such as missed payments, late payments or judgments will show up on a credit report. When a co-signer is brought on in obtaining a loan their credit report becomes just as important as your own.

Co-signers aren't just for individuals who have bad credit, sometimes a new college student looking to purchase a used car may not have a sufficient enough credit history to take out a loan. This is where having a co-signer such as a parent or legal guardian can assist in the process. They can use their extensive and highly rated credit history to help the college student obtain a loan to purchase the vehicle.

Over time after enough payments have been made on the loan it may be possible to renegotiate the loan terms and have the co-signer removed or have a new contract drafted without a co-signer and in your name only. Co-signers can be a great steppingstone to establishing your own credit and developing a payment history. Being a responsible borrower will go a long way towards solidifying a financial future.

Another added benefit of having a co-signer is when you may qualify for a loan even with less than perfect credit. The interest rate may make it cost prohibitive and too expensive to be financially feasible. By having a co-signer with a stellar credit history it may be possible to obtain better terms with regards to interest rate and payment schedule.

An important consideration when looking to enlist the help of a friend or family member to be a co-signer on a loan is to remember that they will be just as responsible for the debt as you are. Should the loan go into default, not only are they liable to make payments or pay off the loan completely, any missed or late payments will negatively impact their credit report as well. Due to this legal responsibility do not be surprised if whomever you ask to be a co-signer flatly says no.

Co-signing on a loan is not a responsibility to be taken lightly. Even though it may be perceived simply as having someone help you out always understand that they're just as legally responsible for the loan as if they had taken it out themselves. Having a co-signer can go a long way towards establishing or repairing credit but it is a big responsibility based on trust and respect.