Many borrowers, be they cosigner or primary borrower (also known as the maker), don’t recognize the magnitude of the responsibilities borne by co-signing a loan. Even it is not delinquent, a cosigned loan is part of your credit history. Since financial institutions consider a cosigned loan your responsibility, they’ll include it when calculating your debt-to-income ratio.
This ratio helps lenders judge whether you have too many bills to pay relative to your income. The cut-off point varies widely among financial institutions and the type of loan. If it’s too high, though, the result is the same: you loan application will be denied — even when the primary borrower never misses a payment on the cosigned loan.
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