8 Personal Loans With a Co-Signer in 2023

What’s the difference between a co-signer and a co-borrower?

Co-signers and co-borrowers have a similar effect on a personal loan application but different responsibilities for repaying the loan and accessing funds.

Co-signer: A co-signer vouches for someone else’s loan application and agrees to repay it if the borrower doesn’t. The co-signer can’t access the loan proceeds, nor can they see information about the loan, like how much you’ve repaid or if you missed a payment, says Massachusetts-based certified financial planner Therese Nicklas.

Co-borrower: A co-borrower is a partner applicant on a joint personal loan and shares responsibility for repayment. This person has equal access to loan funds and payment information.

When is a co-signer a good idea?

Lenders use information like your credit and income to decide whether you qualify and what your loan amount and annual percentage rate should be. Adding someone with better credit, higher income and low debt to support your application makes a lender more confident that the loan will be repaid.

A co-signer can help if:

• You have bad credit. There are personal loans for bad credit, but few lenders approve applicants with credit scores below 600. If that’s you, a co-applicant with better credit could increase your approval odds.

• You want a larger loan. Lenders offer the largest loans to well-qualified applicants, so including a co-applicant could increase the size of your loan.

• You need a lower rate. Since the APR affects your monthly payments, adding someone to the application could get you a lower rate, meaning a less expensive loan.

» MORE: See your bad-credit loan options

How much a co-signer or co-borrower helps depends on factors such as:

• The co-applicant’s credit score.

• Both your credit histories.

• Your combined debt-to-income ratio.

• The lender’s underwriting criteria.

Risks of adding a co-signer

It’s important for you and your co-applicant to understand the risks of co-signing before submitting an application. These can include:

• A hard credit check, which will temporarily lower both of your credit scores.

• Higher debt-to-income ratios for both of you, which could make it harder to access credit during the life of the loan.

• Damage to both of your credit scores if a payment is missed.

• Damage to the relationship, which could be harder to salvage than your credit.

Next steps: Check personal loan rates

Pre-qualify to see if you're approved for a loan on your own and, if so, at what rate. The pre-qualification process doesn’t affect your credit score, and you could find an affordable offer without a co-applicant.

If not, some lenders allow you to add a co-borrower during pre-qualification to give you a more accurate rate estimate. A co-signed option may only be available if you don’t get a loan offer.