Co-signed Loans

There are times when a person either has a credit score that is too low to qualify for a loan or simply doesn’t have the credit history to secure a loan. Sometimes it is possible to still get a loan in your name if you have a person with a good credit score who is willing to put their name on the loan to guarantee payment should you default.

That is what is known as a co-signer. Quite often this type of loan is used to purchase a new or used automobile. Parents often co-sign a vehicle loan for their children on the first car they buy because there is insufficient credit history and lenders don’t like to take a chance.

The benefits of having a co-signed loan enable the borrower to establish credit history in his or her own name so that in the future a co-signer may not be needed once a certain credit score is reached. Other loans make use of co-signers as well, but most often it is for the purchase of a vehicle and second to that would probably be a home loan.

If you are lucky enough to have a family member with good credit, co-signed loans are a great way to begin establishing credit in your name, especially if you’ve had debt problems in the past.