Does Cosigning Build Credit? How Cosigning Affects Credit

By Dan Miller · January 27, 2023 · 6 minute read

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Does Cosigning Build Credit? How Cosigning Affects Credit

If you are working on building your credit, you may be interested in cosigning or getting a cosigner for your own credit application. In some cases, you may not be able to get approved for a loan if you don’t have any credit history. If that’s the case, one way that you can help build credit is by having a cosigner.

A cosigner is someone you know who already has established a positive credit history and a good credit score. This person is usually a trusted friend or family member. The prospective lender will consider the credit of both the primary applicant and any cosigners when deciding whether or not to approve the loan.

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How Does Cosigning Work?

Cosigning is one way to build credit if you don’t already have an existing credit history. When you have a cosigner, the lender will use both your credit profile and that of the cosigner to determine whether or not to approve your loan request.

Without any sort of credit profile, some lenders may not be willing to issue you credit, or the interest rates they offer may be quite high. In those cases, you may consider applying with a cosigner who already has good credit in order to increase your odds of getting approved or securing better terms.

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Cosigning vs Authorized User

Besides cosigning, becoming an authorized user is another way to help build credit. Here is a quick look at how the two approaches differ:


Being an authorized user

The amount of debt factors into the cosigner’s debt-to-income ratio. Debt information on an account where you are the authorized user does not affect your debt-to-income ratio.
Both the cosigner and the primary account holder are responsible for making the payments. An authorized user is not responsible for making payments.
Both the primary account holder and the cosigner must be adults. Children can be approved as authorized users on a parent’s account.

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Does Cosigning Help Build Your Credit?

When used appropriately, cosigning can help build your credit. Just make sure to avoid these mistakes when choosing a student loan cosigner, or a cosigner for any other type of loan. If the responsibility is not taken seriously, it could have negative implications for both parties’ credit.

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When Cosigning Can Build Your Credit

If you’re just starting out and establishing credit, using a cosigner can be an attractive option. If you have a trusted friend or family member who is willing to cosign on your loan, you may be able to qualify for a loan that you wouldn’t otherwise be eligible for. Then, as you make on-time payments on your loan, your credit score will likely improve due to a positive payment history.

When Cosigning Can Hurt Your Credit

If you find yourself needing a student loan cosigner or any other type of cosigner, it’s important to also understand the potential downsides of cosigning. While being a cosigner does not affect your credit in and of itself, it is possible to damage your credit by cosigning.

When you cosign a loan or credit card, both the primary applicant and the cosigner are liable for the debt. You may find yourself in a situation where your credit is harmed because the other party fails to make regular payments when required. So, depending on your situation, you may be better off with a student loan application without a cosigner.

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Things to Know Before Cosigning

The most important thing to know before cosigning is that cosigning on someone else’s loan does come with some risk. While cosigning can make sense to help a friend or family member who is starting out in life, it’s riskier to cosign for someone who already has bad credit.

If someone has bad credit, then they likely already have a history of not reliably meeting their debt obligations. Make sure you fully understand the situation before cosigning a loan.

Other Ways to Establish Credit

Besides getting a cosigner, there are a few other ways to establish credit.

Open a Secured or Credit-Building Credit Card

There are also some types of credit cards that are marketed to those with a limited credit history. Often, these are marketed as either credit-building credit cards or secured credit cards. As you open credit cards and regularly make on-time payments, your credit score is likely to improve.

Become an Authorized User

If you don’t want to apply for a credit card or can’t get approved without a credit card cosigner, you can consider becoming an authorized user on someone else’s account. In this setup, only the primary account holder is liable for any purchases that are made on the account. Even if the authorized user is the one that actually makes the purchase, they aren’t financially responsible.

Get a Guarantor

A guarantor is similar to a cosigner, but there are some important differences between guarantors and cosigners. A cosigner is legally obligated and financially responsible right away to repay any debts. A guarantor, on the other hand, is more of a backup plan. The guarantor is only responsible for repaying the debt if the primary borrower fails to make payments and the loan is at risk of default.

The Takeaway

When you’re first starting out and building up your credit, you may not be able to qualify for loans. One way to help build your credit is by applying with a cosigner. A cosigner is usually a trusted friend or family member who already has good credit. Applying with a cosigner allows the potential lender to consider both people’s credit. It may help you get a loan that you otherwise wouldn’t qualify for.

When you’ve built up your credit and are ready for a credit card, you might consider a cash-back rewards credit card like SoFi’s credit card. If you are approved for a credit card with SoFi, you can earn unlimited cash-back rewards. You can use those rewards as a statement credit, invest them in fractional shares, or put them toward other financial goals you might have, like paying down eligible SoFi debt.

Apply for a SoFi credit card today!


Does cosigning show up on your credit report?

Yes, cosigning will show up on both the credit report of the primary applicant as well as the cosigner. Any outstanding debt will be used in calculating your debt-to-income ratio, and late payments might negatively affect your credit. This is one reason that it is always important to check your credit score on a regular basis.

Does a cosigner have to have good credit?

A credit card cosigner doesn’t necessarily have to have good credit, but it’s usually more helpful if they do. The whole point of having a cosigner is to use their good credit to help an applicant with poor or no credit qualify for a loan. If the cosigner has poor credit, it may not make a difference in whether or not the applicant is approved.

Whose credit score is used when cosigning?

When you apply for a loan or credit card with a cosigner, the potential lender will use both people’s credit score and history to determine whether to grant approval. Typically, the primary applicant will have poor or no credit, while the cosigner will have excellent or good credit.

Photo credit: iStock/Sitthiphong

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .


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