A cosigner is someone who applies for credit along with another individual who would not be eligible on their own and assumes joint liability for the account. You may enhance the application and persuade the lender that the loan will be repaid if you default by acquiring a co-signer. If you agree to cosign a credit card or loan for a relative or friend, you guarantee that you will pay the balance if the other borrower defaults.
When you cannot qualify on your own for a credit card, mortgage, or other loans, a cosigner can assist you. If the principal borrower cannot make payments, cosigners agree to assume full financial responsibility for the debt. The debt account will be included on the cosigner’s credit report, and based on how the principal borrower handles the account, it might either benefit or hinder the cosigner’s credit score.
Despite having no claim to the loan profits, the cosigner is legally compelled to make payments if the borrower is unable to.