If someone has a poor credit score, she probably needs a cosigner to obtain a mortgage or at least get one without a high interest rate. Cosigning a real estate loan, however, is not just risky for your current assets, but also your creditworthiness. The mortgage has the potential to bring the cosigner's score up or down.
Identification
The act of cosigning a loan has no affect of your credit score. Afterward, any information on the mortgage will then become yours. This could be good, if the primary account holder pays his mortgage on time, or bad, if the loan goes into delinquency, according to Mortgage News Daily.
Considerations
If the primary resident of the estate pays his bills on time, a mortgage could still impede your ability to obtain credit. Adding a cosigned loan to your credit profile increases your debt liability. Even with a good credit score, lenders probably won't approve a loan if the monthly payment on any debt with your name on it exceeds 40 percent of your income.
Potential Complications
Once you cosign a loan, it will affect your score until the other borrower pays off the loan, because lenders are unlikely to let you off the hook. The other borrower could refinance the mortgage -- get another loan to pay off the current one -- an unlikely scenario if he needed a cosigner in the first place.
Tip
BankRate suggests reviewing the financial situation of anyone you cosign a mortgage with and the terms of the agreement. Your credit score is in danger on any cosigned loan, but more importantly, you risk having to pay off the mortgage. If you do cosign and need credit later on, some lenders may ignore the co-owned mortgage in the your debt-to-income ratio if the loan has good payment history for the previous year.
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