It’s estimated that a third of all Americans have bad credit scores. So, whilst having bad credit isn’t massively uncommon, it can have detrimental effects on both personal and financial factors including getting a job or renting a new place to live.
But, one of the main areas in which bad credit can negatively affect is applying for loans as, with a bad credit score, it’s likely your rates will be more restrictive and much higher than they would be if your credit score was good. One of the best ways to get around this issue is to get a co-signer involved when applying for loans, but this is often easier said than done especially if you’re unsure of what you’re doing,
So, if you’re keen to get a co-signer involved but don’t know how to make it work, keep reading to discover what a co-signer actually is and advice on getting started!
What is a co-signer?
In simple terms, a co-signer is someone who will sign for the loan alongside you. The co-signer will then be responsible for repaying the loan if you’re unable to.
Because of the responsibility your co-signer may face, it’s essential they have reliable financial history and a good credit score. So, it’s important to ask around and do your research before jumping in and getting a co-signer on board as, if they prove to be unreliable with a secretly terrible credit score, they won’t be accepted and it may leave you in a worse position than before!
Research is key when thinking about a co-signer, and it’s crucial to compare personal loan offers first before making any big decisions.
Benefits of having a co-signer
It would be pointless getting a co-signer onboard when applying for loans if it isn’t going to provide some advantage to you. The fact is, getting a co-signer can be hugely beneficial if you struggle to get decent loan rates alone, and could mean the difference between being accepted or not.
Having a co-signer will give you extra leverage for negotiation. After all, if they have a strong financial history and an excellent credit score, you’ll have a greater argument to bargain for more manageable repayments and even lower interest rates. It’s your co-signer that will take on overall responsibility for the loan if you’re unable to, and the lender will take this into account when negotiating with you.
And, having a co-signer will simply help you get a loan faster! Applying and negotiating will be much quicker with a reputable co-signer involved, giving you less stress and hassle in the long-run.
So, if you need a loan but are worried bad credit will stand in your way, finding a co-signer may just be the answer! But before committing to anything it’s essential to research your options and ensure your chosen co-signer is financially reputable. Then, making your loan applications are likely to be quicker and simpler than ever before!
