Can You Get a Personal Loan With a Co-Signer?

You can get a personal loan with a co-signer — and it may even help you qualify or get a better rate. However, not every lender accepts co-signers, so it's good to shop around.

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What Is a Co-signer and Why You Should You Use One?

A co-signer is someone who puts their name on a loan application along with you to help you get approved. This can be effective if they have a higher credit score than you, as it helps the lender feel more confident about approving the loan. Since a co-signer is taking on the responsibility of repaying your debt if you can't, it's typically a family member or trusted friend.

Using a co-signer can help you get a lower interest rate on your loan and a larger loan. Students, young adults and anyone rebuilding their credit could benefit from applying with a co-signer.

What Does a Co-signer Need to Qualify?

Since the purpose of using a co-signer is to increase your chances of getting approved for a loan, you won't want to ask just anyone to be your co-signer.

Look for a co-signer with:

• A good credit score — usually considered a FICO score of 670 or higher

• Stable income

• Low debt-to-income ratio

These all signal to the lender that they're a trustworthy borrower. They'll also need to show proof of ID and income for the loan application.

Your co-signer needs to be willing to take legal responsibility for the loan repayment if you are unable to make payments yourself. So it should be someone you trust and who trusts you.

How Does Co-signing a Personal Loan Work?

When you apply for a personal loan with a co-signer, both your name and your co-signer's name will go on the loan agreement documents, and you will both need to sign the loan agreement. However, the co-signer doesn't get the loan money — they're sharing the risk and agreeing to take responsibility for payment if you're unable to.

So, does cosigning affect your credit? Yes — if you miss any payments on your loan, it will affect your credit score as well as your co-signer's. Additionally, lenders will go after the co-signer if you default on the loan.

A loan co-signer can technically have bad credit, but keep in mind that this won't help your approval odds, which is the main reason to use a co-signer in the first place.

Pros and Cons of Getting a Loan With a Co-signer

Asking someone to cosign on your loan isn't just to cover your finances — both of you are also trusting one another to take on an added responsibility. Take a look at these pros and cons so you can keep your finances and the relationship you have with them safe.

What To Consider Before Asking Someone To Co-sign

Before cosigning a loan for you, your family member or close friend should fully understand the risks and obligation they're taking on. They need to be willing to pay off your loan if you can't, so you should also have an honest discussion about your ability to repay.

Beyond signing the loan agreement together, you should put a backup repayment plan in writing to address how you'll handle payments if you need assistance down the road.

Bottom line: Only ask someone you trust — and who trusts you.

Lenders That Offer Personal Loans With Co-signers

Not every lender will accept co-signers on personal loans, but here are some options that do.

Top Lenders That Accept Co-signers

Alternatives to Getting a Co-signer

If you don't have the minimum credit score required to get a personal loan and you aren't able to find a co-signer, you have some other options.

1. Consider Applying With a Co-borrower

Unlike a co-signer, a loan co-borrower shares access to the loan funds, so they're not just signing on to take responsibility for repayment in your stead. A co-borrower should be someone you trust, and you should make an agreement in writing for how you'll split up the loan funds and payments.

2. Improve Your Credit Score Before You Apply

If you're new to credit and wondering how your credit score is calculated, several factors weigh in:

• Payment history: 35%

• Credit utilization: 30%

• Credit history length: 15%

• Credit mix: 10%

• New credit inquiries: 10%

Some of these take time to build up, but your best bet for increasing your credit score is to make on-time payments and pay off your debt.

3. Try a Secured Personal Loan

You could also try applying for a secured personal loan, which uses collateral like cash in a savings account or even the home you own. Since you're putting up collateral, the lender may be more willing to extend you the funds even if your credit is poor.

4. Borrow a Smaller Amount

Consider borrowing a smaller amount than you originally intended if you're struggling to get approved for a personal loan. Smaller loans are generally easier to get approved for.

FAQs

Can you get denied even with a co-signer?

Yes, you can get denied for a loan even if with a co-signer if the co-signer doesn't have a high enough credit score, can't demonstrate a solid income or if their debt-to-income ratio is too high.

Is a co-borrower the same as a co-signer?

No, there's a difference between a co-borrower and a co-signer. A co-borrower shares the funds of a loan, while a co-signer doesn't get any funds and only takes on responsibility to repay the loan if you can't.

Can you remove a co-signer later on?

You could be able to remove a co-signer later on by obtaining a co-signer release.

How long does it take to get approved with a co-signer?

Getting approved for a loan with a co-signer shouldn't add much time to the application process as long as your co-signer provides all their required information on the application.

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