conversation: User (sphanley): "One of the most common recurring questions on /r/personalfinance these days seems to involve a scenario where a close friend or family member, often a parent or sibling, wants the poster to cosign on some sort of financial commitment for which the acquaintance would not otherwise qualify, due to problems such as poor credit, insufficient/inconsistent income, or other unspecified issues. \n\nIn many cases, the person pressuring the poster to cosign will offer an emotional argument which resonates with the poster, such as pointing out times in the past where they've helped the poster in one way or another. \n\nThis post is an attempt to canonically summarize the community wisdom around this recurring topic.\n\n**Here goes:**\n\nIf you cosign on any sort of financial obligation with another person, you're equal partners in that obligation. This means that you're on the hook for payment just as much as the person asking for your cosignature. There are (at least) two major implications of this fact:\n\n- If the person for whom you are cosigning finds themselves unable or unwilling to continue making timely payments, **you** will be pursued for the debt and held accountable as much as they will be. This means that unless you step up and take over making payments, debt collectors may be sent after you, the delinquency will likely be reported to your credit score, and you will, broadly, suffer the exact same consequences as if *you'd* defaulted on a loan that was solely in your own name.\n\n- Additionally, and *just as importantly*, even if all is well and timely payments are being made, the loan will show on your credit report as though it is yours (since it effectively *is*). This means that in the case of a major loan such as a mortgage, or even an auto loan, your ability to get a loan of your own in the future may be negatively impacted. If you cosign on a mortgage to, say, help a parent out of a bind, you may find yourself unable to secure your own financing when you're ready to buy a home of your own, as until the cosigned loan is paid off, you already have a mortgage.\n\nFor these reasons and more, the community consensus is almost always that cosigning a loan is inadvisable and should be avoided. Do not cosign on any obligation that you aren't prepared to take full responsibility for if things go awry. If you're absolutely sure you could and would take on that responsibility without derailing your other financial goals, it **might** be okay to *consider* cosigning on, say, an auto or student loan -- but if you aren't ready for that responsibility, then run, don't walk, away. As for a mortgage, it is advised that you should never cosign on a mortgage with someone you are not married to, full stop. This means you are advised not to cosign on a mortgage for a sibling, parent, or friend -- ever. Marriage (in the United States and countries with similar legal systems around marriage) comes with legal parameters to help determine what happens in case two people separate while sharing a debt. If you aren't married, there's no protections, and any sort of falling out or separation is dramatically likely to result in a major, regrettable headache. \n\n\nFurthermore, even if you feel that you are fully prepared for the possibility of being held responsible for payments, take time to deeply consider all other potential financial implications of the decision before taking on this commitment. When a bank refuses to provide specific financing to a person, that means that they've made a determination that it's a bad idea. If they've made determined that it's too risky for them to facilitate the financing, it's almost always safe to say that it's too risky for you to consider as well.\n\nNo matter how hard someone works to convince you that you're in a position where you can do them a major favor, it's important to recognize that by cosigning on a debt that they are potentially not going to be able to repay, you would be setting them up for even more significant hardship down the road. Even if it seems difficult to refuse, in the vast majority of cases, choosing not to cosign is ultimately the better choice for *all* parties involved.\n\n---\n\nI put this together and proofread it a couple of times, but if I missed any important details or misstated anything, please feel free to offer suggestions/corrections/formatting improvements. Thanks, folks!\n\nEDIT: Thanks for the huge response, as well as for the gold, y'all! I'm going to try to work through some of the responses and make refinements to the post based on the feedback. I appreciate all of the feedback as well as the robust discussions taking place in the comments!"
  Self: "It might be nice to add situations where co-signing is reasonable. For example, when I bought my first car, with little credit, my dad co-signed on the loan. It wouldn’t have put him out financially to take over the loan if I’d defaulted. It can be a great vehicle to help a child build credit and responsibility."
  hath0r (hath0r): "Me and my gf are co signed on each others loans we are not in debt and you must be in debt to get credit so ..."
  