Co-Signer Loan Risk Calculator

What Co-Signing Actually Means

Co-signing = you are 100% LIABLE for the loan. If primary borrower stops paying, lender comes after YOU for the full balance, plus late fees, plus collection costs. Loan appears on YOUR credit report as YOUR debt. Counts against YOUR debt-to-income ratio. Lender does not have to even attempt collection from primary borrower first — they can skip straight to you.

Default Statistics — How Often It Happens

CFPB and FDIC data: 38% of co-signers ultimately pay something on the loan. 28% see their credit damaged. 26% see their relationship with primary borrower damaged. Student loan co-signs: 30%+ default rate over loan life. Auto loan co-signs: 15% default rate. Personal loan co-signs: 25% default rate. These are population averages — close family members default at LOWER rates but consequences are higher.

Credit Score Impact — Two Ways

(1) Hard inquiry at application: minor 3-5 point temporary drop. (2) Ongoing reporting: loan counts toward your debt-to-income. New $300/month payment on co-signed car loan reduces your borrowing capacity by ~$60K mortgage equivalent. (3) Late payments by primary borrower: appear on YOUR report. One 90-day late = 100+ point credit score drop, lasting 7 years. Co-signing is a financial bet on someone else's life staying stable.

When Co-Signing Makes Sense

Acceptable: small loan you'd pay off anyway (under 5% of your annual income), primary borrower has stable income just lacks credit history, you've discussed and documented backup payment source. NEVER acceptable: large loan you couldn't afford to fully pay yourself, primary borrower has erratic income, you're co-signing to avoid awkward family conversation. If you co-sign anyway: insist on having loan auto-debit from JOINT account you can monitor, get release-from-co-sign provision in writing.

Sources: CFPB Co-signer Disclosure Rule, FDIC consumer protection data. Last updated: May 2026.