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Topics addressed on January 6, 2010:
Potential consequences of cosigning an apartment lease
Is there any affect on your credit report and getting a loan in the future if you are a cosigner for an apartment?
Being a cosigner for an apartment lease will not affect your ability to get credit in the future, unless the person you cosigned for defaults on the lease.
Rental payments are not routinely reported to credit reporting companies. Because the rent payments are not reported, they do not influence credit scores or lending decisions.
However, if the person fails to meet the requirements of the lease, the owner of the apartment may take legal action, such as a civil lawsuit, or have a collection agency attempt to recover the unpaid amount.
By cosigning the lease, you agreed to take responsibility for the lease payments if the other person didn’t pay. Your name would be included in the civil judgment or collection agency account for the unpaid debt, and those very likely would appear on your credit report. Civil judgments and collection accounts both have very negative impacts on credit scores and lending decisions.
I suggest you keep in touch with the person for whom you cosigned and be sure they understand the importance of making the lease payments. Be certain that they will tell you if they might have trouble making payments and that you can help them meet the obligation. Otherwise, you may be putting your creditworthiness at risk.
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- The "Ask Experian" team