6-Step Guide To Getting Co-Signed Personal Loans From Direct Lenders

Personal loans are often the go-to financing of people who are in dire need of funds. Unfortunately, it’s hard to find a lender that approves loan applicants with unstable income and poor credit score.

A co-signed personal loan is a significant financial option for people who are ineligible to take out loans on their own. In this loan, there’s a second borrower called a “cosigner,” who’s equally responsible for paying back the loan as you do.

Loan companies don’t usually approve applicants with poor creditworthiness. But if your cosigner has a higher income and better credit than you do, you can be eligible for a loan application. Put simply, cosigners act as guarantors on loan. Here’s a step-by-step guide to getting personal loans with a cosigner.


Step 1. Check Your Creditworthiness

Gather information about your credit history, credit report, credit score, and debt-to-income (DTI) ratio. All of these determine whether you’re eligible for a loan, a credit card, a job, a business, or insurance.

If you own a credit card or took an installment loan before, you’d surely have a credit history. A credit history shows how you pay bills. In contrast, a credit report refers to your personal information (i.e., name, address, security number), credit cards, previous and ongoing loans, repayment history, and overall debt. A credit report is a summary of your credit history.

What lenders primarily use when assessing your creditworthiness is your credit score, which is a three-digit number based on your credit history. If you have a good history, you’ll get a good credit score. Higher credit scores qualify for better interest rates. However, if you have a poor credit score and are low-income, you’ll unlikely qualify for loans or lower interest rates.

Lastly, calculate your debt-to-income ratio. Recent studies show that borrowers with high DTIs tend to have repayment troubles, resulting in loan companies giving a big deal on DTIs. Personal loan companies lend money to applicants with debt-to-income ratios of 50% or more. If you have a lower DTI, make sure that your cosigner has a higher DTI.


Step 2. Check Your Cosigner’s Creditworthiness

Just like how you check your creditworthiness, you also have to check your cosigner’s credit report, credit history, credit score, and DTI. Most of the time, a cosigner with a good credit score and stable income can help you get a lower interest rate for any loan amount.

Again, you have to ensure your cosigner’s creditworthiness, not because you know him or her. You want your cosigner to be financially responsible. The last thing you want is someone who feels obligated to say yes but is incapable of making payments in the event of an emergency.

See to it that your cosigner understands the obligations of being a cosigner and that they are equally responsible for the personal loan. You don’t want to put a burden on them inadvertently.


Step 3. Compare Personal Loan Companies and Get Prequalified

Do some upfront research because not all lenders accept cosigners. Additionally, you might want to shortlist lenders with better interest rates. After deciding which loan companies to choose, you and your cosigner must apply for prequalification.

Prequalification typically involves a run-through of your and your cosigner’s personal and financial information. However, there’s no need to worry. These soft credit checks wouldn’t affect both of your credit scores. If you successfully prequalify, loan companies will let you know about the loan offers you may receive.


Step 4. Compare Personal Loan Offers

In addition to interest rates, keep an eye out on a lender’s annual percentage rate or APR. It includes the interest rate plus loan fees, which gives you an accurate measure of a loan’s cost. You might want to check a lender’s fee structures, collateral, and loan and repayment terms. Make sure to pick a loan offer that meets your needs at the most affordable terms.


Step 5. Officially Apply to a Personal Loan Offer

When you officially apply on a loan offer, you have to send specific documents to the lenders so they can decide whether they will make a deal with you and your cosigner. These include your and your cosigner’s bank account statements, copies of paychecks, and hard credit checks. This time, this hard inquiry check will cause a small ding to both of your credits.


Step 6. Enjoy your loan!

If approved for a loan, you can immediately receive the funds via electronic deposit or however you wish. Some lenders approve applications after a couple of days, while others can decide within the day you sent all of your financial info.



One way to be able to take out a loan despite poor credit is getting yourself a cosigner. A cosigner must have a higher credit score than you do and would have to put their credit score at risk for you. Hence, you can say that maintaining a good credit score is as hard as finding a suitable cosigner.

Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.