Use a Student Loan Cosigner to Help You Establish Credit and Save Money
If you’re about to apply for private student loans, and you don’t have a credit history or a credit score, you’re not alone. And if you have a credit history, but not a great credit score, a cosigner may help you qualify for more competitive private student loans and interest rates than you thought possible.
What is a Cosigner?
A cosigner is a person who signs for a student loan with you. While a cosigner is not always required, if you apply with a cosigner, it is important you both understand that if you miss payments or default on your loan, the cosigner agrees to takes responsibility for payments and the remaining balance. Both you and your cosigner have equal responsibility to repay your loan. On-time payments made to your loan may positively impact your credit score and that of your cosigner. However, missed or late loan payments, unpaid balances, and default may affect both you and your cosigner’s credit negatively.
If you apply with a cosigner, your cosigner should be financially stable, with a good job and a solid employment history and/or own a home or other assets. You should be prepared to answer any questions your potential cosigner has that will show you’re capable of and serious about taking on the financial responsibilities of the loan. It’s important that both of you understand all terms of the loan and be clear on responsibilities before signing.
Using a Cosigner
Private student loans may be available to students without credit histories, but there can be advantages to adding an approved cosigner to your student loan. The better your cosigner’s credit score, the lower the interest rate you may qualify for, helping you to potentially qualify for lower payments and reduce the interest you pay over the course of your student loan.
If you will be able to make student loan payments and just need someone to give you a chance to prove you’re financially responsible, applying for a private student loan with a cosigner can be a great way to potentially build your credit and save money. Many lenders allow eligible borrowers to remove a cosigner from their loan after they meet certain requirements and have a certain number of consecutive, on-time monthly payments; with Nelnet Bank, that number is 24 consecutive, on-time payments.
