How to Co-Sign a Large Personal Loan with Bad Credit

(April 2024)

How to Co-Sign a Large Personal Loan with Bad Credit

In This Article

So you’ve been thinking about co-signing a large personal loan with bad credit, right? If that’s the case, this article is for you. Co-signing a loan is a big undertaking you shouldn’t take lightly; if you have bad credit—and hopefully your co-signer has a stellar FICO score—you can get better loan terms.

In the following lines, you’ll learn how to co-sign a large personal loan with bad credit.

  • Find a trustworthy person
  • Let the co-signer know the financial implication and risks
  • Gather the correct documents
  • Make plans to pay back the debt
  • Keep communicating with the co-signer

Now, let’s consider these steps!

1. Find a Trustworthy Person

To co-sign a big personal loan with bad credit, find a reliable person who is willing to accept the responsibility. A co-signer can be anyone, from a close family member to a trusted friend, but ensure that his or her credit is on point. Ideally, the credit score should be above 670, strong enough to get you a big personal loan with bad credit.

Look for someone with a strong work history and a permanent home address. Also, the person must have solid income and a low debt-to-income (DTI) ratio. Lenders usually work with minimum income and DTI ratio requirements to approve an individual as a co-signer on a loan. Make sure your co-signer meets these requirements.

But preferably, choose a family member to co-sign your massive personal loan. The family bond might make it easier to convince him or her to co-sign your loan. Aside from that, he or she is more likely to get a sense of shared responsibility to accept payment of the loan even when you default.

2. Let the Co-signer Know the Financial Implications and Risks

Never manipulate or sweet-talk anyone into co-signing a large personal loan with bad credit. Although co-signing a loan can improve your co-signer’s credit score, it can also affect the credit score negatively, especially for a large personal loan with bad credit.

Make him or her understand the implications of co-signing the loan totally—and let the co-signer decide whether he or she wants to accept the responsibility. Make the co-signer understand that co-signing a large personal loan might have a financial consequence that affects his or her ability to successfully apply for a loan in the future.

Explain everything about the loan to your co-signer, and make sure he or she understands. Be transparent and don’t hide anything. Your co-signer will appreciate that and will thank you for it, and also prepare himself or herself for unforeseen events.

3. Gather the Correct Documents

Make sure your co-signer has access to—and can review—your personal loan documents before starting the application process. These documents include financial details, credit history, and other relevant documents. Don’t keep your co-signer in the dark about your financial situation, so try to maintain utmost transparency with him or her.

Lenders usually review a co-signer’s details before approving his or her co-signer status on a loan. The co-signer fills out an application, providing his or her address, marital status, Social Security number, current employment details, income, expenditures and assets. The application also provides a place for the co-signer to consent—answer “yes” or “no”—to the financial obligation.

Ask your co-signer to provide his or her documents, including a means of identification for the lender to review. These documents help the lender ascertain the co-signer’s financial situation and trustworthiness.

4. Draw up a Plan to Pay Back the Debt

Before co-signing a large personal loan with bad credit, have a good plan to maintain income flow so you can repay the loan. Don’t keep the co-signer in debt for too long. Draw up a strategic plan that comprises actionable financial moves—with a time limit—to clear the loan.

Adopt the budgeting method of debt payment to help you commit to your loan payments. List all your income sources as well as expenditures, and remember to include your loan payment under the “Expenditures” category. Allocate money to each expected expenditure. This way, you prioritize your debt, enabling you to focus on paying it off.

If you have limited monthly income and cannot allocate sufficient amounts of money to monthly payments, look for ways to cut down on other expenses so you accommodate your monthly payments. Additionally, make plans for short-term investments or any seek any other income stream to boost your income level so that it becomes easy to pay your loan back.

Any default in payments—no payments, late payments, etc.—deals a blow to both your credit and your co-signer’s credit. Adequate planning enables you to be proactive with your debt and deal with it faster. However, make your plans as realistic as possible—within what you can achieve.

5. Keep Communicating With the Co-Signer

Maintain an open line of communication with the co-signer after completing the application process and signing the loan document with him or her. Let the co-signer in on whatever the lender decides or any other relevant information concerning the loan. If the application is successful, make sure you keep in touch with the co-signer throughout the loan payment process.

A delinquent payment affects both parties’ credit reports and scores, which jeopardizes your ability to get a loan in the future. To curb this risk, notify your co-signer whenever you cannot make a payment. The co-signer may be willing to cover the payment for you, even if it means you have to pay him or her back later. The bottom line is that you and your co-signer should work as partners and co-operate to pay off the loan successfully.


It’s quite simple to co-sign a large personal loan with bad credit if you have the right knowledge. If you need to co-sign a large personal loan with bad credit, get a trustworthy person, tell the co-signer all he or she needs to know, and gather the correct documents. Lastly, draw up a clear and actionable plan to pay back the debt and maintain communication with your co-signer.

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