What to Do If You Can’t Find a Cosigner

A loan is needed for virtually everything including mortgages, cars, college tuition, businesses, and any other generally high ticket item.

Unfortunately, not everyone has the credit rating to receive these big loans, which means you would need to obtain a cosigner should you not be able to satisfy a lender’s terms.

The cosigner is set to accept the responsibility on behalf of the lender, assuring that the loan will be paid back.

They genuinely will accept the risk should it not be paid back. As such, this is a huge favor on behalf of the cosigner.

They generally don’t get anything from it, except probably the admiration of the person they’re signing for.

However, not everyone is in a position to get a cosigner. If you find yourself in a similar position, here are some things that you can do to satisfy the lender’s needs to obtain financing.

Other Lending Options

As you understand, there are some stringent lending terms for credit unions as well as banks. This will disqualify more than a few people. If you find yourself denied, you may want to look at some other options to borrow money.

Most turn to friends or family for a private loan. There may be a promise to repay, or anything else to satisfy them to make sure that you pay it back.

This will do something for you in the short term, but won’t really help if you’re looking for a loan in the future, as being denied is usually based on credit. Private loans don’t do anything for a bad credit score.

There are also peer-to-peer loan options, such as Prosper and Lending Club. It’s true that they judge your credit score to a degree, it’s much less than what a bank or credit would consider when determining who is credit-worthy enough.

Instead, peer-to-peer lending groups attach higher interest rates to would-be lenders.

Borrow Money with Collateral

Some borrowers decide to put something up to satisfy a lender. Borrowing against collateral is an age-old way to get funding, such as borrowing against your car, and it still can work wonders today.

Basically, a lender wants to make sure that they’ll get their money back and in a timely fashion.

If the borrower happens to default, they can take ownership over what they accept as collateral.

Since you won’t have a cosigner going this route, you can potentially be in a worse position if you don’t pay the loan back. Depending on what you put up – you’ll be in dire straights without that, too.

Strengthen Your Credit Score

If you can’t find a cosigner and you’re being denied a loan, you’ll probably find that your loan is denied because of your credit history.

Strengthening your credit score will pay off in a myriad of arenas. A great score will give you better insurance rates, more attractive rental options, and better loan options. It’s just overall better prospects for the future.

Poor credit can cost up to half a million dollars, according to the Lifetime Cost of Debt Calculator.

While it may be difficult to do, it’s a thing that takes a pretty simple strategy.

Just keep your credit balance low, pay off bills on time, and don’t take on unnecessary debt if you can help it. Aim for less than 35 percent of your allotted credit limit.

Your credit score can is affected by the number of credit cards with balances that you own, even if it’s just a small amount. You should ways to get rid of as many of these balances as possible.

Request Less Money

Some people find that they could do with a little less money on the loan. This isn’t a favorite option for potential lenders, but it does work.

If you request less money, lenders could be more receptive because it means smaller, or maybe even less-frequent payments.

This could be more palatable for lenders who are generally just interested in your credit score and income.

Take Some Time

No one wants likes to delay asking for money. After all, there’s usually a good reason why they need it. Unfortunately, it may just not be a great time to borrow.

While it usually isn’t personal, it’s true that the lender doesn’t feel as if you’re worth the risk. In short, they don’t think that you’ll pay them back.

You may have all the intent in the world to prove them wrong, but intentions don’t always come to fruition.

You can see this as a blessing.

If it’s something that you can remedy in the future, it’s probably best to just wait and work on things that will make any payments more affordable.

If you’re rejected, there are probably a few things that you can work on in the meantime. You may have little or bad credit, a lower-paying job, or a combination of both.

If you can fix those things in a reasonable amount of time, you’ll probably be approved and be much better off in other ways, too.

Credit History

Credit history is absolutely integral to a great score. The longer it is, the better that your score will be. As such, we suggest you keep old accounts open.

As you know, paying bills on time is important. In fact, it’ the single largest factor in determining a credit score.

Every lender wants to know that they receive their money when it’s due – not a moment later.

Making minimum payments may probably be the most comfortable way to do things, it doesn’t look very good to lenders.

To them, it seems as if you’re happy to delay payments. At the very least, it shows that you’re having some financial hardship.

A cosigner can remedy many problems for approval. Unfortunately, it doesn’t really do much for the underlying problems.

Take it One Step at a Time

Taking steps to improve your credit, through both action and mindset, will ultimately be the way to go.

It may be a headache for the short term, it will greatly pay off in the future. However, if you can’t find a cosigner, the options above will be of some help.