Does a co-signer have to have good credit?

Question

I don't have any credit and I know for a fact that I will have to have to have a co-signer to be able to get a car but the only co-signer I have doesn't have any credit either. We both have had our jobs for at least two years each and make good money. Does that make a difference?

Answer 1

We just financed a new vehicle but weren't allowed to co-sign for my brother in law because we had financed our own. a co signers credit greatly affects your ability to get financing. however no credit is better than bad credit so it wouldn't hurt to give it a shot.

Answer 2

No.  A co-signer is required when your credit isn't good enough.  The co-signer would have to be able to get the loan in his own right.

Answer 3

Yes, a co-signer has to have good credit.  Usually you need a co-signer if you have no credit or your credit history is poor. The co-signer would need to have good credit because if you don't pay, the co-signer is stuck with the bill.  It wouldn't make sense for a lender to accept a co-signer with poor or no credit since the lender wants to be assured the money will be paid.

Answer 4

i guess..?!

Answer 5

A co-signer on a loan will pass their credit rating on to you.  If you're establishing credit, you'd want that to be a good credit rating that you're inheriting.  If your co-signer also has no credit, I would assume you will not get the loan (the same for a co-signer with bad credit).  Lenders are being increasingly careful during the current economic times.

Co-signers also need to be careful.  When you co-sign on a loan, not only are you creating a binding obligation to pay off the loan in full if the loan recipient does not make payments, your credit rating can also take a hit if the borrower makes late payments or misses payments.

I've put together a page with some ideas on how to establish a good credit record for yourself.  Have a look if you'd like, I've put a link in the sources.

My husband is not American, so had no credit rating upon moving to the US (they don't transfer internationally).  We did quite a bit of research finding out the best and quickest ways to establish credit.

Good luck to you!