Whether you co-signed a loan for your friend, family or relative, there will time come when you want to be free from being co-signer of loan. When you co-sign for a loan, then automatically you become joint applicant for the loan. In this way if other person misses a payment then you will be responsible to make the payment. The payment history will be reflected on both of your credit reports.
Co-signing for loan will impact on your chances of getting approved for a mortgage or auto loan for yourself. Until the loan you co-signed is not paid off, it will count toward your credit ration. Lenders will also look at it when you will apply for any type of credit, even credit cards. Main drawback for co-signing is that if co-signed loan increases your debt-to-income ration or the percent of credit you owe versus your available limits, it will hurt you if you apply for credit.
How to get your name off from co-signed loan?
You can get off your name from co-signed loan when your friend or relative had made on-time payments for about six months to a year on their loan and had applied to refinance the loan in their name. When the part of the loan is being repaid and the balance is lowered, then the total lower amount will be easier for them to get approved without co-signer. For that they will have to apply with their bank, credit union or other lender to refinance the loan. Finally when new loan will be on their name you will be off from the current loan.
This will benefit your friend or relative with whom you had co-signed for loan. Because they will be able to lower their interest rate and that will save them money. They will make now payments themselves and it will increase their credit score.
The benefit which you will get is that burden from your shoulders will be off. Now whether they don’t pay you won’t be responsible anymore. Keep in mind for re financing loan your friend or relative have to do it through a new lender.
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