Signing a personal loan with a co-signer? Consider these important factors before going ahead

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Strong credit: Aim for a co-signer with a credit score of 670 or higher, as they are more likely to meet the lender’s minimum credit score criteria. A higher credit score from the co-signer could potentially lead to a lower interest rate for you. - Stable income: Certain lenders stipulate minimum income prerequisites.

To enhance approval odds, seek a co-signer whose income meets or surpasses the required threshold. - Favourable debt-to-income (DTI) ratio: Ideally, opt for a co-signer with minimal debt relative to their income. Some lenders impose minimum DTI ratio criteria, comparing your total debt to your monthly gross income.

Requesting someone to co-sign a loan is a substantial decision. It may strain your relationship if you encounter financial difficulties in the future and default on the loan. Carefully consider who you approach to undertake such a responsibility.

Choose someone with whom you share a strong relationship and with whom you can engage in open and honest discussions. Ideally, select someone you trust, and who trusts you in return. It’s crucial that both you and the co-signer feel comfortable with the agreement and are aligned regarding the financial responsibilities entailed.

There’s always a chance that a lender may reject your loan application, even with a co-signer. However, in such a scenario, the lender is obligated to furnish a rationale for the denial, aiding you in understanding what steps to take for approval in the future. When applying for a personal loan, lenders typically review your credit history and current employment status.