How Can I Build Credit With a Cosigner?

Building credit with a cosigner is functionally the same as performing it on your own. The major difference is that any actions that have a positive effect on credit rating will only accrue to the principal borrower, but that any actions that have a negative effect on that will damage the rating of both parties. In addition, collection efforts will usually focus on the cosigner rather than the principal borrower.

Instructions

1

Find someone that you trust and that has a vested interest in your success. Most cosigners are family members, close friends, business partners or employers. Try to only get a cosigner for a loan that will increase your overall ability to service debt, such as a student or auto loan. The loan rates offered will be greatly affected by the credit rating of the co-signer.

2

Pay back the loan according to its terms in a timely fashion. Monitor the credit report and address any errors that appear in a timely fashion to prevent it from impacting the credit report.

3

Consider opening another line of credit or taking out another loan. Demonstrating good credit behavior with a variety of loan types has a positive effect on credit rating.

4

Attempt to pay back the terms of the cosigned loan faster than those laid out in the original terms. This will reduce risk to the cosigner and build up credit more quickly.

5

Avoid taking on more debt than you can service alone, even with a co-signer. Although the co-signer is obligated to cover the loan if payments become late or it enters default, it causes many additional problems and has a severe negative effect on the credit ratings of everyone involved.