How will co-signing on my student loan affect my co-signer's credit?

Gizmo

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Hello everyone. I haven't been able to find a clear answer to my question. This question is for those who had someone co-sign on their student loan. Did your co-signer see any effect on their credit report as far as being able to obtain their own loans or their credit score getting lower?

I ask this because I am asking my father-in-law to cosign a pharmacy school loan (alternative loan) for me, but he is concerned that it would affect his credit in such a way that he would not be able to get a loan if he needed to. The loan amount that he would co-sign for would be $19,220, and it would be deffered for the four years that I would be in school. Also, the loan has an option of taking him off as co-signer after two years of on-time payments. I called SunTrust (the people that I will get my loan with) and two different people told me that it would not have a negative effect on his credit. He called SunTrust and spoke with the same person twice, and the guy said that it would have a negative effect on his credit and that he would not be able to get his own loan for 6 years.

Does anyone have any insight?

Thanks!
 
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Gizmo

Gizmo

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Well, we just called again on a three-way call and the SunTrust guy told us that they don't know how his being a co-signer will affect his credit. He said that we have to call the credit reporting agency (they use Transunion) to find out how it will affect his credit report. I tried calling, but they don't even have a live person on the other end.

Hmmmm......
 

mshheaddoc

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It will effect his credit but it shouldn't that much (if he doesn't have alot of credit). If he has decent credit and multiple tradelines its not going to ding him like 50 points or anything like that. Additionally its a term loan so when you start making payments it will help both of you. If he's concerned about how it will affect his debt ratio if he were to apply for a loan for himself, some companies will allow proof that he's just a co-signer. Unfortunately since the cosigner is ultimately responsible for the debt if the borrower defaults most companies will still include this.

Any type of loan will effect your credit rating but it shouldn't hurt him that bad if he already has established credit. Does that answer your question?
 
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Gizmo

Gizmo

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Yes, mshheaddoc; this does answer my question. I'll pass this information on to my father-in-law. Thank you!
 
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