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Does being a car loan cosigner affect your credit score?
My brother wants me to cosign his car loan, but I don't want to do it if it affects my credit. Will cosigning a car loan affect my credit score?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That’s a nice gesture to cosign for your brother’s
car loan
. The good news is that if you trust him to make the payments, you probably won’t have to worry about much of an impact on your credit score.As a cosigner, you may see a hit to your credit if the lender performs a hard inquiry. Before agreeing to cosign, ask if the lender will do either a hard or a soft inquiry. A soft inquiry will show up on your credit report but will not impact your credit.
If you’re approved as a cosigner, you won’t see a hit to your credit report unless your brother doesn’t pay the car loan for more than 30 days. At that point, you might get a letter from the lender that says your car loan is delinquent. They may give you a time frame to pay the amount owed before reporting the delinquency to the credit bureau.
Additionally, the lender will likely require that your brother gets full coverage car insurance. Not only will full coverage protect the lender’s asset, but it will also ensure you aren’t paying for the loan should the car get totaled.
If your brother wants an easy way to shop around for the best car insurance policies, you can recommend he use the
Jerry
app. Jerry compares customized quotes from top insurance providers, like Allstate and Nationwide, to ensure you always have the best rate and coverage. View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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