• Whenever you apply for credit, be it through a bank or through a loan company, your credit history is going to be checked.
• If it is found that you have a bad credit history, or no credit history at all the loan application may be turned down.
• This scenario is quite common for younger people just entering the workforce or persons who have had past credit issues.
• So, how do you get that much-needed approval to either establish credit for the first time or start rebuilding a good credit history if you have in fact been turned down?

Well, there is a way, getting a co-signer. Let's have a quick look at the pros and cons of this option and see if this is, in fact, the best way forward.

What is a co-signer?

If you find that you are ineligible as an individual, you may find that a co-signer is required to get the credit you are looking for. When the person you have approached to be a co-signer agrees to sign the loan application with you, they are agreeing to repay the loan on your behalf if you fail to keep up the repayments. For the bank or loan company requiring a co-signer, they are reducing the risk of any default of the loan.

What are the pros of co-signing?

The benefits of having a co-signer are that the application for a loan or credit is more than likely to be approved where otherwise it would not have been approved. Once granted, and if properly managed you are on your way to establishing a good credit record.

For the co-signer, the pros are reduced in the fact that they are more at risk if anything goes wrong during the term of the loan.

What are the cons of co-signing?

The main issue with co-signing is how the co-signers credit score will be affected if you default on the paying back of the loan.

The co-signer will be fully responsible for the repayment of the loan under the terms of the agreement if the original applicant fails to keep up the repayments, and as stated it will have a negative impact on the co-signers credit history.

Should I get or be a co-signer?

If you decide to approach a close family member or a friend to ask them to co-sign a loan application with you, it is best to think of all the ramifications before you make your decision.

It must be understood from the outset that by being a co-signer you will reduce your available credit should you wish to apply for credit in your personal capacity at any time.

Careful consideration of the financial impact is important. If you do agree to be or to get a co-signer and the loan goes pear-shaped there will be emotional consequences involved. The relationship between yourself and the co-signer could suffer long-term damage.