Is It a Good Idea to Co-Sign?

March 22, 2022
Credit Repair Agencies

Today, My Credit Guy is going to address an issue that is plaguing our country. This issue is on the topic of co-signing. Is it a good idea and smart decision to co-sign for someone else who is applying for a loan? Have you ever asked anyone else to co-sign for you?

Watch our video above or read more to learn about whether co-signing is worth the risk.

What is Co-Signing?

Co-signing is a financial practice that can affect anyone: old or young, rich or poor, etc. Co-signing is simply when someone puts their name on the dotted line backing someone else’s promise to pay a loan. When you back someone else, you tell the bank that you will pay with your own money and credit should the primary borrower fail to pay.

On the surface, co-signing usually doesn’t seem like a big deal because the people involved know each other very well. They most likely have a very tight-knit relationship for this conversation to even come up. Don’t let that be a trap to get in to something you potentially should shy away from. Even if you are co-signing a car loan, for example, for your child, you need to be willing to pay if they don’t.

How Does Co-Signing Affect you?

Being a co-signer is actually a very important commitment. For instance, if any payments ever become late from the original borrower, those late payments also impact the co-signer’s financial health. The co-signer’s credit will take the hit and go right along for the ride with the borrower. The co-signer is deemed equally liable for the payments being made to the creditor. As such, you might end up needing a credit restoration agency because of payments someone else should have made.


It’s bad enough when the person for whom you have co-signed makes late payments. But think about the worse-case scenario. Say it’s a home mortgage. In this case, if the person has failed to make enough payments, they could have a foreclosure on their record. As a co-signer, you will too. Whatever financial notice that they incur as a result of the loan — a foreclosure, a repossession, etc. — will appear on your credit statement.

There is no easier way to sink into bad credit and the need for credit restoration than one of these notices on your record.

How Can You Protect Yourself?

So here’s the million dollar question: what can you do to protect yourself in the event you are a co-signer? Or better yet, what should your thought process be if someone asks you to co-sign? What kind of position are you putting someone else in by asking them to co-sign for you?

Today’s video goes in-depth on what those next steps should be, and we have outlined advice below.


The reality is that co-signing still happens — it is human nature to want to help people out, especially our own children, close friends, and family members. In the case that you feel compelled to co-sign, though, you want to be extremely safe and proactive. After all, you become totally liable by signing your name.

To help the person who needs to borrow and to protect your own credit, you actually should become the primary borrower. The person who needs the loan then becomes the co-signer. In reality, though, this practice makes much more sense because you will get all of the notices first. In the event that the person does not make a payment, the bank will contact you first and you’ll have a chance to pay before you take any hit to your credit.

With this type of arrangement, you want to make sure that you have a written agreement with the co-signer. You should expressly state that, while you are signing the first line, they are expected to make the payment or pay you back 100 percent. Tailor this agreement to fit the situation, certainly, but the point is to add a layer of security to your credit score.

Credit Repair Agencies

Is your bad credit holding you back from moving forward on a loan? Are you unsure of what your next move is in order to get your credit turned around?

Contact My Credit Guy, a credit repair agency, today for a FREE, non-obligatory credit review with one of our experts. You’ll receive a line-by-line, detailed analysis of exactly what you’re up against, as well as recommendations on how to move forward on your path to complete credit restoration.


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