Co signer vs co applicant a complete overview

By Nooreen B
Modified on June 6, 2023
co signer vs co applicant

Whether you add someone else to your loan or ask another person to be on yours, you’ll see options between a co-signer and a co-applicant. These roles sound pretty similar, but they are not the same thing. Below you will find everything you need to know about the differences between a co-signer and a co-applicant and the responsibilities those roles entail. 

What Is a Co-signer?

A co-signer is someone who adds themselves to a loan to increase approval chances and loan amount for another person. The other person in this scenario will be the primary borrower. What does this mean exactly? Well, the primary borrower is the person who is responsible for making the monthly payments. If the primary borrower defaults, the co-signer will be responsible for paying back the loan, with all its past due balances (not limited to principal and interest). 

If someone asks you to be a co-signer, they likely have a bad credit history or no credit history, or not enough income to qualify for a specific loan amount. 

An Example of a Co-signer

A co-signer is usually an immediate family member like a sibling, parent, or spouse. To better understand the role of a co-signer, it may be helpful to see an example. 

Let us say that you don’t have the best credit score but are trying to borrow a personal loan for $10,000. You go through the application process and are only approved for $3,000 because of your credit history. In that case, you may turn to a parent with better credit and higher income. You can apply again if they agree to co-sign for a loan. With their added credentials, your chances of getting that total of $10,000 and potentially a better interest rate increases! 

Many loans have the option of adding a co-signer; student loans, auto loans, payday loans, personal loans, and more. 

Requirements To Be a Co-signer

To be a co-signer, a person must be at least 18 years old, have a good credit score, and have some kind of income. On top of that, they need to fill out some information on a loan application and allow for a hard credit inquiry. And finally, they will need to agree to the terms and conditions of the loan to take on the role to be a co-signer. 

Pros and Cons of Adding a Co-signer Onto Your Loan or Becoming a Co-signer Yourself 

There are some important factors to consider when adding a co-signer to your loan or are thinking of becoming a co-signer yourself. Here are some pros and cons: 

Pros of Adding a Co-signer

  • Adding a co-signer can increase your chances of getting loan approval with no credit or poor credit, help you get a higher loan amount, and get more affordable loan repayment.
  • Adding a co-signer can help you improve your credit score (as long as you make your monthly payments on time).
  • Asking someone to be a co-signer is less demanding and awkward than asking them to borrow money. 

Pros of Being a Co-signer

  • Being a co-signer can also improve your credit if the primary borrower makes their payments on time. 
  • By co-signing on a loan, you can really help someone build their finances.

Cons of Adding a Co-signer

  • If you have a co-signer on a loan and cannot make regular payments, you can ruin your co-signer’s credit score. 
  • Co-signing may harm your relationship with a close friend or family member. 

Cons of Becoming a Co-signer

  • Becoming a co-signer comes with a lot of legal responsibility, which includes all loan charges if they cannot be paid. 
  • As a co-signer, any missed payments from the primary borrower will hurt your credit score. 

What Is a Co-applicant?

A co-applicant, also called a co-borrower, is responsible for monthly payments on a loan just as much as the other party involved. Loans with more than one co-borrower can also be called joint loans or joint credit—essentially a shared credit account. Just like a co-signer, a co-applicant will be responsible for paying back the entirety of the loan if the other party defaults. Most of the time, co-applicants are involved if both parties have an ownership interest for an asset or if there is a higher income requirement. 

Examples of a Co-applicant

Most of the time, a co-applicant will be a spouse, other family member, or business partner with whom you share finances or are planning to share an asset. Usually, mortgages will have co-applicants. 

For example, let’s say you want to buy a home and are currently renting with a significant other. If you plan to live together, your significant other will likely join the mortgage loan as a co-applicant. As a co-applicant, their credit score and income will be looked at, and they will be subject to the same application process and loan documents as you. Additionally, they will get the benefit of co-owning the house! Sometimes with a mortgage, one co-applicant’s income may not be used for strategic reasons, but they will still be considered a primary applicant on the loan, with all the responsibilities.

Another typical example of having a co-applicant is if you are a business partner. If both co-borrowers own the business, they may want to equally split the cost of a business loan or personal loan option to pay for running or expanding the business. 

Requirements To Be a Co-applicant

To be a co-applicant, you may have to have a good credit history and some sort of income, depending on the loan and lender. The good thing about co-borrowing is that lenders may be more flexible with a loan’s qualification and amount. This is because more than one person is responsible for repaying the loan. Like most loans, you will need to be at least 18 years old to qualify, and you may have to live in the same state for which you are applying for a loan. 

Pros and Cons of Adding a Co-applicant Onto Your Loan or Becoming a Co-applicant Yourself

Like being a co-signer, you should know about the pros and cons of being a co-borrower before signing up for a joint loan or asking another person to co-borrow with you. 


  • Adding a co-borrower to a loan can get you more favorable loan terms, such as lower interest rates and a higher loan amount. 
  • Being a part of a joint loan can make it easier to make regular payments.
  • You don’t need excellent credit when co-borrowing on a loan. 


  • With a joint loan, you are taking on full and equal responsibility for the loan. And so, if the other party cannot pay, you will have to cover their portion of the loan payments. 
  • If anyone misses a payment, it will impact the other co-borrower’s credit score. 
  • Things can get complicated between two people when they co-own an asset, such as a home. 
  • Even if you make on-time payments, but the other co-applicant does not, you could both lose that asset, regardless of your good financial habits. With co-signing, the primary borrower will have sole ownership of an asset. 

The Bottom Line

The main difference between a co-borrower vs. a co-signer is that a co-signer is not considered the primary borrower. And therefore, a lender will not require a co-signer to make monthly payments on a loan, unless the primary borrower cannot. A co-borrower is someone who pays back a loan with another person. When they sign up to co-borrow, they sign up to take on joint responsibility for monthly payments. If one borrower cannot pay the other must cover the full payment.

There are some simple requirements to be either a co-signer or co-borrower that you should know about. Lender have age requirements, credit scores, and income minimums. There are also pros and cons to consider when adding a co-borrower or co-signer to a loan or deciding to take on that role for someone else. 

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