Can a co-signer help me improve my credit rating?
Technically, no, a co-signer cannot directly help you repair your credit. But they can help you get an auto loan if your credit score is not that hot. If a lender is about to approve you for a car loan with bad credit, a co-signer might be just the ticket. And what car loan they allow you to get can improve your credit score.
The role of a co-signer in auto loans
If you have credit problems, a co-signer can help you get approved for a car loan. Getting attached to the loan makes the lender more likely to say yes, as the co-signers also promise to take over if the primary borrower stops making payments.
However, since they also have to pay off the loan, everything that happens with the loan affects their credit and yours. This means that if you miss payments, they lose both of your credit scores. Not to mention that the lender can legally sue your co-signer for the money if they cannot withdraw it from the primary borrower.
A co-signer can be anyone, but due to the great responsibility that comes with it, most borrowers usually ask their close friends or family to co-sign. However, it is not just a good credit rating that is required. A co-signer must also be able to self-qualify for the loan. with regard to their income.
Auto loans and credit repair
Once you get a cosigner and get approved for an auto loan, credit improvement can begin in earnest. A car loan is a great way to work on credit repair.
Every on-time payment you make adds to your payment history, which is the single most important factor in your 35% credit score. Auto loans are installment loans, so having one adds to both your credit mix and your new credit, these factors each account for 10% of your score.
Your auto loan can only help with credit repair if other areas of your credit are not ignored. This is one of the reasons that lenders take steps to ensure that you can comfortably afford an auto loan.
Keeping track of your auto loan is one thing that can improve your credit, but don’t ignore your other bills. As we mentioned, payment history is the thing that has the most impact on your credit reportsSo, making timely payments can really boost your score.
You can also try to keep your credit usage to a minimum. When your credit card balances are high compared to your credit card limits, it can really lower your credit score. Try to reduce your balances if you are trying to repair your credit.
Bad credit car loans with cosigners
It is not uncommon for lenders who finance bad credit borrowers to require a co-signer in some cases. Whether or not you need it depends on your lender, but choosing one anyway can increase your chances of getting approved – and possibly getting better rates or loan terms.
Another way to make sure you get the auto loan you are looking for is to work with the right kind of lender up front. If you are in need of a car loan and your less than perfect credit score is embarrassing you, applying to a subprime lender can be the key to successfully securing a car loan.
Here has Express auto loan, we have built a nationwide network of special finance dealers who have signed up with these lenders. Let us connect you with a local dealership and be on your way to credit repair with an auto loan. Complete our free and secure auto loan application form to start now!