What is a co-signer?
If you have a poor credit score or an insufficient credit history, lenders might not be willing to risk giving you a loan. A co-signer can help you qualify for a loan if you can’t on your own, and they can even help you to get better terms or rates if they have a good credit score or better.
A co-signer will join your loan application as a financially responsible party to the loan in case you default, but they have no ownership in the property or assets you purchase with the loan. Since co-signers aren’t a beneficiary for anything the loan is purchasing, they aren’t responsible for regular monthly payments.
“A co-signer [...] promise[s] the bank they'll cover it if you can't, but they don't get any say in the property or thing you bought,” said Sudhir Khatwani, founder of The Money Mongers, a personal finance blog.
Who can be a co-signer?
There are typically no restrictions on who can be a co-signer, though a co-signer is often a family member or close friend. It’s best to find someone who has a good or excellent credit history and is willing to take the risk of being responsible for your loan if you stop making payments.
Pros and cons of using a co-signer
While getting a co-signer can be a good idea for some, for others it’s not worth the risk.
Pros
- Can help you qualify for a loan
- A co-signer with good credit can help you get better loan terms
- You’ll fully own the asset, it won’t be shared
Cons
- Co-signers are responsible for the loan if the borrower defaults
- Missed payments hurt the co-signer’s credit
What is a co-borrower?
Co-borrowers are joint loan applicants who share the responsibility of a loan and its repayment.
“Think of a co-borrower like a teammate: you both share the responsibility for the loan and, [as a] bonus, you both get to enjoy whatever you bought, like a house,” Sudhir Khatwani said.
Co-borrowers are fully responsible for all loan repayments, and their credit score will be affected by any missed payments. If one of the borrowers can’t make the payments, the co-borrower must continue to make payments in full.
Think of a co-borrower like a teammate: you both share the responsibility for the loan and, [as a] bonus, you both get to enjoy whatever you bought, like a house.”
“Teaming up as co-borrowers can mean you get more money or better loan terms because you're pooling resources,” Khatwani said. “The catch? If one of you drops the ball, the other's picking it up.”
Who can be a co-borrower?
While a co-borrower can be anyone, they’re typically a close family member, a friend or a business partner who is OK with being jointly accountable for the loan. They’re someone you want to share ownership of an asset with.
Ideally, a co-borrower should have a strong credit score and a good income. This will help you both to qualify for better loan terms and a lower interest rate. A good co-borrower will also be diligent to help make monthly payments, as they are equally responsible for the loan.
Pros and cons of using a co-borrower
Co-borrowers have the same responsibility as any individual borrower on a loan, but there are some risks.
Pros
- Shared responsibility and repayment
- Combined income and credit for more buying power
- Better potential for loan approval
Cons
- A co-borrower with poor credit can affect your loan terms
- Missed payments will affect both of you
When to use a co-signer vs. a co-borrower
Most types of loans allow co-borrowers and co-signers, including personal loans, mortgage loans, student loans, home equity loans and auto loans. But when you’ll use a co-signer versus a co-borrower varies.
When to use a co-signer
Co-signers can help you qualify for a secured or unsecured loan you wouldn’t be able to qualify for on your own, such as if you have a limited credit history, poor credit history or a limited income. You’ll also typically use a co-signer if you don’t want to share ownership of the asset.
For example, teenagers or college students typically use their parents or another family member as co-signers for student loans or auto loans.
When to use a co-borrower
While you may not need a co-borrower, it’s fairly common to use a co-borrower in situations where you want to share ownership of an asset.
For example, if you’re buying a home with your spouse or partner, you’ll usually be added as a co-borrower on the loan application. Or, if you have a business and a business partner, you’ll typically apply for business financing as co-borrowers.
» MORE: Best co-signed and joint loans
Considerations for co-signers and co-borrowers
If you’re considering being a co-signer or a co-borrower for someone, keep the following in mind.
Considerations for co-signers
Becoming a co-signer doesn’t entitle you to the asset or items being purchased, but you become responsible if the primary borrower can no longer make payments. You should have full faith that the borrower can be trusted to handle the loan repayment on their own.
If the borrower defaults on the loan, you will become responsible for loan repayment on a monthly basis. If you can’t make the payments, this will negatively impact your credit score and finances.
“Co-signers are giving someone with maybe not-so-stellar credit a helping hand,” Sudhir Khatwani said. “The tricky part is they're taking a gamble without directly benefiting from the loan.”
Considerations for co-borrowers
If you’re planning on becoming a co-borrower, it’s important to trust the other person you are applying for the loan with. Defaulting on a loan can severely hurt both of your credit scores, and it’s important to be prepared to make the entire loan payment if necessary in case your co-borrower can’t help for any reason.
FAQ
How many co-signers or co-borrowers can you have?
In most cases, lenders only allow one co-signer on an application with you. But you can have more than one co-borrower on a loan, up to a limit set by your lender.
How do lenders evaluate a co-borrower or co-signer?
Lenders typically evaluate potential borrowers or co-signers by evaluating their credit profile and score, income, debt-to-income ratio (DTI) and the condition of the asset being purchased with the loan. Lenders may also consider any collateral or assets the borrower or co-signer has, including bank account balances.
What is the difference between a co-signer and an authorized user?
A co-signer is a loan applicant who helps someone qualify for a loan, such as a mortgage or student loan, while an authorized user is someone who has access to your credit account, such as a credit card. An authorized user doesn’t need to qualify to be added to a credit account, and the main borrower is solely responsible for paying back the debt incurred by the user.
Why do student loans involve a co-signer?
Student loans are taken out by new college students who typically haven’t had enough time to establish a strong credit profile. Students also typically can’t qualify for the loan on their own due to lack of income. Co-signers help student borrowers to qualify and potentially get a much better interest rate.
Can a co-signer be removed from a loan?
A co-signer can’t be removed from a loan. Instead, the borrower will either need to refinance the loan without the co-signer or wait to pay off the loan to remove the co-signer.
Can you remove a co-borrower from a loan?
To remove a co-borrower from a loan, you’ll typically need to refinance the loan, though it’s possible a lender may approve removal of a co-borrower in some cases, like divorce. Also, some types of mortgages are assumable, such as government home loans, which means the loan can be transferred to someone else without having to refinance.
Bottom line
Co-borrowers and co-signers both help you qualify for a loan and potentially get better rates, but they have very different responsibilities. Co-borrowers are commonly spouses or partners who are making a purchase with you, such as a new car or home. Co-signers are there to help you qualify for a loan, but don’t expect them to make payments unless you can’t.
If you’re going to use a co-borrower or co-signer on your loan, make sure you understand their expectations before applying. And you should only sign up for a loan that you are willing and able to make full payments on without relying on the other person. If you can’t keep up with loan payments, you’re not only putting your credit profile at risk, but theirs as well.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Consumer Financial Protection Bureau, “What Is a Co-Signer for a Student Loan?” Accessed Feb. 4, 2026.
- Federal Trade Commission, “Cosigning a Loan FAQs.” Accessed Feb. 4, 2026.
