Co-Signning For Family/Friends?

Co-signing happens often—helping someone get approved for a car, a rental, or a credit card—but most people don’t understand the long-term consequences. When you co-sign, you become fully responsible for the account, and lenders treat you exactly like the primary borrower. Any late payment, missed payment, or collection hits your credit the same way and stays for years. Many people only find out how damaging it is when they apply for a mortgage and someone else’s debt or late payment shows up in their DTI and credit score.

Auto loans are the only co-signed accounts with a possible workaround. If you co-signed a car loan and the other person has made every payment for the last 10 consecutive months directly from their own bank account, a mortgage lender can typically exclude that auto loan from your debt-to-income ratio. Your name remains on the loan, and it stays on your credit report, but documented proof of 10 months of payments from their account can keep it from hurting your DTI during mortgage qualification.

Authorized user credit card accounts can affect both your DTI and your FICO score. Even if you never used the card, the balance and monthly minimum payment can show up on your credit report and be counted against your DTI. If the primary user carries high balances or pays late, your credit score can drop as if it were your own card. You can remove yourself by contacting the credit card issuer, but if late payments occurred while you were attached to the account, the negative history may remain on your report.

Rental and lease co-signing offers no flexibility. If you co-sign a lease and the tenant pays late, breaks the lease, or owes fees, the collection reports to your credit as well. There is no exclusion rule for rentals. You cannot remove yourself until the lease term ends, and any negative activity attaches to your credit for years.

Co-signing ties your credit, liability, and borrowing power to someone else’s financial behavior. Before agreeing to any co-signed account—car loan, rental, or authorized user account—understand exactly what you’re taking on and how hard it is to reverse once your name is attached.