Cosigner

Lenders may ask for a cosigner when the main borrower has a limited credit history, low income or a weak credit score. By adding a cosigner with stronger finances, the lender gains extra confidence that the loan will be repaid. Parents often cosign loans or rental agreements for their children.

A cosigner is not just a reference. They are legally responsible for the full debt. If the main borrower misses payments, the lender can ask the cosigner to pay, and missed payments can damage both people's credit reports. The loan also appears on the cosigner's record, which may limit their own ability to borrow.

In some arrangements, a cosigner also shares ownership of whatever the loan buys, while in others they take on the obligation without any ownership.

Cosigning can help someone get started, but it carries real risk. Anyone asked to cosign should be comfortable that they could repay the full loan themselves if necessary, and should keep track of whether payments are being made.