Bank may not notify you when cosigner fails to pay

Dear Experian,

I co-signed my son’s auto loan. He was over 30 days late on one payment. Why should that impact my credit score when I was never notified by the lender or asked to make the payment? I knew I was responsible for the loan balance if asked to pay. But, I had no idea that my credit score would be lowered when I was never asked to make a payment.



Dear JHP,

You should never take lightly the decision to cosign a loan. When you cosign for a loan, you put your credit history at risk. As a cosigner you share full and equal responsibility for ensuring loan payments are made on time each month, not just after a loan default.

The lender is not required to notify you that the loan has become delinquent. It’s up to you to ensure the person you cosigned for is going to make the payment on time and in full. If they don’t, it’s going to damage your credit history and credit scores.

Before you cosign, make sure the other person understands the risk you are taking and the damage they can do to you if they don’t make every payment on time. Make them agree to tell you well in advance if they even remotely suspect they won’t be able to make a payment.

If possible, set up online account access so you can monitor payments and ensure they are being made. Monitoring the account can give you early warning if the payment doesn’t arrive on time. You may then be able to make the payment before any damage has been done to your credit history, although you might still be faced with fees or penalties.

Thanks for asking.

- The “Ask Experian” team

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