Is it bad to have a cosigner on a loan?

No, it is not bad to have a cosigner on a loan. Having a cosigner on a loan will not damage your credit score at all, and it could help you qualify for a larger loan with a lower interest rate if the cosigner has a high credit score and income.

The only time that it’s bad to have a cosigner on a loan is if you’re not confident that you’ll be able to repay the loan. The responsibility of repaying the loan will fall to the cosigner if you cannot make the payments, which can put strain on your relationship.

Reasons Why It Can Be Bad to Have a Cosigner on a Loan

The cosigner may end up being responsible for the loan

If the primary borrower does not make payments on time, the responsibility for repaying the loan will fall to the cosigner, which can be expensive.

Both parties may suffer credit score damage

If the primary borrower misses a due date by 30+ days, the lender will likely report negative information to the credit bureaus. This can damage the credit scores of both parties.

Your relationship may be strained

Discussing the financial obligation is important before getting a cosigner loan. You may damage your relationship if the cosigner has to clean up your mess.

The cosigner may have a hard time getting a loan in the future

The record of a late payment will stay on a credit report for up to 7 years from the date the lender reported it. This could prevent the cosigner from getting a loan with good terms in the future.

The lender could sue the cosigner

If the lender cannot collect payment from the cosigner or primary borrower, they may file a lawsuit. Even the fees associated with a lawsuit can be expensive.

There are some benefits to having a cosigner on a loan, though. The cosigner can help the primary borrower qualify for a loan, get a lower interest rate and build their credit score. Ultimately, both parties need to seriously consider the risks and benefits before getting a cosigner loan.

If you think a cosigner loan is right for you, check out WalletHub’s picks for the best personal loans with a cosigner. Then, you can estimate your potential rates with our free pre-qualification tool.