Co-signing someone else's loan is a big risk. Many people co-sign thinking they're just helping the other person qualify for a loan. Sure, that's part of it, but there's more. Whenever you co-sign for someone, you're basically saying if the person defaults on the loan, you'll take responsibility for the payments. Is that what you mean to say when you co-sign for someone else? Probably not.
Read: Why You Shouldn't Co-Sign for Someone Else
If you can't qualify for a loan without a co-signer, you should work on improving your credit so you can qualify alone. Asking someone else to guarantee your debt isn't fair to that person. Even if you pay on time, you temporarily limit their ability to get new credit cards and loans of their own.
No kidding! I did this once, with my fiance, Richard, to refinance the mortgage on his house. But nobody told us he should also put the house in my name – and we turned down life insurance on the loan.
He died suddenly a month or two later, and there I was! He had no will, so I couldn’t even inherit the house.
Fortunately, his brother, who was next-of-kin, respected what Richard would have wanted; he had the house sold and the debt paid from the proceeds.
Marcia – I am so sorry to hear that. That sounds aweful; going through a personal loss and dealing with financial issues as a result.
The only time I have used a cosigner is when I was younger. My parents cosigned an auto-loan so I could begin building my credit at a young age.
With me, that is the only way I would co-sign for someone; to help build their credit if they have none. I would never co-sign for someone with a poor credit history because history often repeats itself.