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How to Find a Cosigner for a Loan
You’ll likely need to find a cosigner if you’re looking to borrow private student loans. This is more common than not for college students, who usually don’t have an extensive credit history. Continue reading to learn how to find a cosigner!
Don’t miss: Scholarships360’s free scholarship search tool
What is a cosigner?
A cosigner is a secondary person who takes on financial responsibility for a loan. The loan is listed on both the borrower’s and cosigner’s credit reports. If the borrower defaults on the loan, the cosigner becomes responsible for payment.
Cosigners are required for most private student loans. This is because private lenders have eligibility requirements for credit score and history, which young students often don’t meet. If the cosigner is creditworthy, they can help the student become eligible for a private student loan.
See also: How do student loans affect credit?
Having a cosigner will increase your chances of receiving a student loan. Some lenders also offer a lower interest rate for having a cosigner.
Who can be a cosigner?
Anyone who is a United States citizen or permanent resident with good credit can co-sign a student loan.
Being a cosigner is a big commitment, especially since private student loans can take 10 – 15 years to pay off. It’s important that you select a cosigner who is trustworthy. The borrower and the cosigner should be able to openly discuss their finances.
Here are some other things to look for in a student loan cosigner:
- A history of making payments on time
- A good credit score
- Stable employment and steady income
- No recent bankruptcies
The cosigner should be able to comfortably pay the loan on their own if they needed to. In an ideal situation, the borrower would make their payments on time and in full, and the cosigner would act as a safety net.
Consider as an alternative to student loans: Income share agreements
How to find a cosigner
Most students don’t need to look farther than a parent to co-sign their student loans. If your parent can’t be your cosigner, look to another family member, such as a grandparent, aunt, or uncle. Siblings or cousins can also make good cosigners, but be sure they can take on the responsibility.
A cosigner does not need to be a family member. If you don’t have a family member who can co-sign your student loan, consider a close friend or mentor. If you are a graduate student, a professor who you’ve worked closely with may also be willing to be your cosigner. Overall, you should choose someone who wants to support your education.
When asking someone to be your cosigner, have a good understanding of the details of the student loan. Be open and honest about the potential risks that come with co-signing a loan. You can sit down with the potential cosigner and make a plan to ensure that there are no negative effects for either person.
Be cautious of online cosigners or strangers
Some students who can’t find a cosigner turn to personal ads or websites that match students with a random cosigner. These websites request personal information and details of the loan are hoping to receive. There is often a fee for the service, too.
These situations should be avoided because the stranger you are matched with may not actually be creditworthy. Or, they may want something in return such as a portion of the funds from the loan. The worst-case scenario is that you get scammed.
Before looking for a cosigner online, put the website through the same rigorous evaluation that you would a student loan lender.
See also: How to spot student loan scams
Remember, choose your cosigner wisely (and don’t forget to thank them!)
A cosigner will most likely increase your chances of receiving a private student loan to fund your education. Good luck!
Keep on reading
- Navigating different types of student loans
- The ultimate student loan guide
- What is a student loan credit score?
Frequently asked questions about finding a co-signer for a loan
Can you find a student loan cosigner online?
Additionally, it can be difficult to ascertain whether a cosigner is legitimate if you find them online. You’ll want to ensure that you put them through an intensive screening process before submitting any payment. And make sure that you do not submit personal details that they may use to steal your identity. Ensure that any cosigner you find online has a legitimate business practice with accountability. Talk to previous clients, find a way to reach them and hold them accountable for their end of the deal.
What do I do if I can't find a student loan cosigner?
If you can’t find a student loan cosigner, you may have to expand your search to online options. You can also look into borrowing more federal loans, which do not require a cosigner and generally have more favorable terms anyway.
Another option is to look into loan alternatives, such as an income-share agreement. While these are not all too common at the moment, they are expanding into new schools and fields of study. To many students, an income-share agreement will be far preferable to a loan.
What credit score does a student loan cosigner need?
Ideally, a student loan cosigner should have at least 670 credit score which is considered at the low end of the “Good” spectrum of scores.