Cosigning a loan or financial agreement for a friend or family member might seem like an act of support or your attempt to help someone. However, it is important to understand that cosigning comes with its own set of risks and potential problems. There are often-overlooked challenges of being a cosigner, which is why we shed light on why it is crucial to approach this decision with caution.

The Promise of Cosigning:

Cosigning is when you agree to take on the financial responsibility for someone else’s debt if they fail to make payments. Most of the time, it is done to help individuals with limited credit history (such as a child going off to college) or poor credit scores. A cosigner can assist someone to secure loans, credit cards, or rental agreements. While the intentions behind cosigning are usually positive, the reality can be far more complicated and often negative for the co-signer.

Things to Consider:

  • Credit Score Impact: One of the significant problems with cosigning is its impact on your credit score. When you cosign a loan, it appears on your credit report as if you took out the loan yourself. If you already have this type of loan, you can negatively impact your credit. Also, having too much outstanding credit (based on including the co-signed loans) can lower your credit score. Finally, any missed payments or defaults by the primary borrower will significantly damage your credit score (through no fault of your own). Find more information about what factors affect your credit score HERE.
  • Strained Relationships: Cosigning can strain relationships, especially if the borrower fails to meet their financial obligations. When the borrower misses a payment, they often fail to let the cosigner know. This means that the co-signer finds out once their credit score decreased. Having a good credit score monitoring can notify you immediately when your credit score changes. Attorney Kristina Feher’s favorite phone application (app) to monitor your credit is Credit Sesame. Having to have a difficult conversation over money often causes tensions to rise. As a cosigner, you may have to cover payments or deal with debt collectors due to the borrower’s negligence. This added financial strain can take a toll on your overall well-being and quality of life.
  • Legal Liability: As a cosigner, you are just as legally responsible for the debt if the primary borrower does not pay or defaults. This means that creditors can come after you for payment, call you at home, call your cell phone, sue you in a court of law, and even garnish your wages or seize your assets to satisfy the debt.
  • Limited Control: Even worse, even though you are legally liable for the debt, cosigners often have limited access or control over the loan or the account. You may not have access to account information, and you may not be able to view the account online. You may not make decisions regarding payment schedules or modify the loan or the payment. Those decisions are typically made by the primary borrower.
  • Difficulty Obtaining Credit: Cosigning is a long-term commitment that can extend for the entire term of the loan. Even if your relationship with the borrower sours or circumstances change, you are still legally obligated to fulfill the terms of the entire agreement. This is often common when you cosign a loan for a significant other, but then you end up breaking up. Even if you are only two years in to a six-year car loan, you will have to deal with the borrower and this loan for the next four years. Cosigning a loan can impact your ability to obtain credit for yourself. Lenders may view you as a higher risk due to the additional financial obligations that you cosigned on. This may make it challenging to secure loans or favorable interest rates in the future. Find more information about how cosigning may affect your credit HERE.
  • Difficulty Removing Cosigner Status: Once you cosigned a loan, it is almost impossible to remove yourself from the agreement. The common ways to remove yourself from a loan include paying off the loan, filing bankruptcy, or having the primary borrower refinance the loan. In order to refinance the loan, the primary borrower would need to show that they have a good credit score and income to refinance the loan into their name. Since the primary borrower needed a cosigner in the first place, this option is not always feasible. Find more answers to cosigner frequently asked questions HERE.


While cosigning may seem like a nice gesture, it is so important to understand the potential problems and risks involved. From damaging your credit score to straining relationships and facing legal liability, cosigning can have more risks than benefit. The consequences can affect you much more than any generosity would benefit you. Before agreeing to cosign a loan, carefully consider all of the factors. Ultimately, protecting your financial well-being should be a top priority, even if it means saying “no” to cosigning requests.

Related articles:

Can a co-signer be responsible for a debt if the other person files bankruptcy? – Feher Law

How is my credit score calculated? – Feher Law

How to get someone else off of a deed or mortgage – Feher Law

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