Many private and state-sponsored student loans may require a cosigner who pledges to pay back the loan if the borrower does not.
Cosigning a loan is an action that should never be taken lightly, because it can have serious implications to credit history. The loan appears on the cosigner’s credit report and can directly affect his or her credit as a debt owed.
Ideally, the borrower of a cosigned loan is reliable, never late and never misses a payment. The cosigner’s willingness to risk his or her credit helps the borrower get the loan and can help the borrower build a positive credit history. If the borrower does not make payments, the cosigner is responsible for repaying the debt. The unpaid debt will appear on both the borrower’s and cosigner’s credit reports, and if payments are late, could harm their credit and perhaps their abilities to qualify for new credit. If left unpaid, it could also lead to collection accounts and harm creditworthiness.