Direct Impact on Your Credit History Acting as a guarantor or co-signer means taking on joint financial obligations. Although this decision is often made as a sign of trust, it can have significant repercussions on your credit history and your future ability to access financial products. It's crucial to understand the difference between the two roles:
• Guarantor: Their responsibility is only activated if the primary borrower defaults. • Co-signer: They share responsibility from the very beginning and are legally considered to have the same level of obligation as the person applying for the loan.
To promote responsible decision-making, APC Experian presents three key aspects that every consumer should consider before accepting this type of commitment:
-
It can limit access to new credit Financial institutions consider all obligations registered in your name when evaluating a credit application. If the primary borrower defaults, you will be responsible for the debt, and this responsibility will be recorded in your credit history, affecting your financial reputation.
-
It's not a simple favor Being a co-signer or guarantor is not a simple favor; it is a decision that must be made responsibly, with information, and foresight. Furthermore, it is essential to formalize the agreement in writing, clearly understanding the amount, term, and default scenarios.
-
You are not automatically released Once you have accepted the role of guarantor or co-signer, you cannot automatically withdraw. The responsibility remains in effect until the debt is paid off or the financial institution authorizes a change in the contract terms.
APC Experian warns about the risks and impact on your credit history.
Before signing: Three keys from APC Experian to make an informed decision about becoming a co-signer or guarantor.
Caring for your credit history is caring for your financial health.
