Do Cosigners Show on Credit?

A co-signer signs a credit obligation with another individual. Often a co-signer is used when the credit or income of the primary signer is insufficient to to enable him to obtain the loan on his own. A co-signer can be a good way to help out a relative or friend, but it does come with a certain degree of risk not only to your credit but to your wallet as well.

Considerations

Both the primary signer and co-signer on a credit obligation are equally responsible for the debt. This applies to loans such as car loans, student loans or a mortgages. The creditor reports the debt to the credit bureau and it appears on the credit reports of the primary signer and co-signer. The credit report reflects any activity on the debt, whether positive or negative.

Significance

The applicant on a credit obligation, the primary signer, is usually the person who makes the payments. If the signer makes a late payment, the lender reports this to the credit bureaus. Since the co-signer and signer both appear on the credit obligation, this late payment also shows up on the credit report of the co-signer. A 30-day late payment can drop your FICO credit score by as much as 110 points, according to MSN Money.

Consequences

If the primary signer stops paying the bill, the lender will seek payment from the co-signer. If the debt becomes seriously delinquent, the lender may turn that debt over to a collection agency. Under the Fair Credit Reporting Act, collection agencies can pull the credit reports of debtors, in this case, both the primary signer and co-signer. Depending upon the amount of the debt, the agency or the lender may decide to sue the primary signer and co-signer to obtain a judgment.

Warning

A judgment against you as the co-signer will appear on your credit report as a public record. According to myFICO, a public record is an an adverse credit report item and will damage your FICO credit score. How much your score falls depends upon the other information in the report. Also, the judgment owner may be able to garnish your wages or place a lien on your property. The judgment could also lead to the seizure of funds in your bank accounts.