Feb 24, 2013 Walt Wojciechowski
Many individuals have cosigned a loan for a family member or close friend at some point. This is particularly common when children head off to college - they often go to their parents, grandparents or other family members for financial help. However, this can affect cosigners' credit reports.
Most people know that if they cosign for a loan and that person defaults, the secondary payer will be asked to make payments, and his or her credit history will be adversely affected. Fox Business noted that as soon as someone cosigns, both parties become equally responsible for ensuring payments are made on time. Only if the account is refinanced and the information changed will that be reflected on the secondary individual's report, the news source detailed.
If a student's failure to make payments damages a cosigner's credit, he or she may find it harder to qualify for loans or gain employment. To mitigate losing out on good business or an employee who would have been a good fit, firms might want to look at the Payment Reporting Builds Credit score, which reflects a history of steady payments on utilities accounts to show reliability.