Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Nov 21, 2012

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Terrible credit scores seem to be the norm today. The world’s economy may arguably be recovering, but the damage has already been done as far as most peoples’ credit scores are concerned.

Once the Great Recession started, job losses became commonplace. With little income, many people turned to credit cards, borrowing money, and getting themselves into debt to pay their monthly bills. Once those sources dried up, foreclosures began. As many people were forced to move out of their homes, a lingering threat became apparent: By borrowing so much money and failing to repay it, credit scores were damaged.

Now, years after the recession began, consumers looking to borrow money are facing a hard time qualifying for financing due to their low credit scores. Finding a willing cosigner is a dream many prospective borrowers now have in order to qualify for loans. However, in loan-related FAQs, rarely do people ask questions about how to find a cosigner.

Cosigning: Then and Now

Cosigning is the addition of an equally responsible party to a lending agreement. This cosigner becomes equally responsible for any and all payments should the primary borrower default. As a result, cosigners may find themselves vulnerable to high payments and fees if borrowers fail to steadily repay their debts.

Despite these potential problems for potential cosigners, the act of cosigning is extremely beneficial to borrowers. With the help of willing cosigners, borrowers are able to qualify for financing that they otherwise had not chance of obtaining. This is because lenders review the credit score, credit histories, and personal financial information of both an applicant borrower and the cosigner.

For these reasons, it is clear why borrowers highly prize and desire cosigners. Unfortunately, since the recession has been so difficult for many people, and since the recovery has been far too slow, the ability to find personal loan cosigners within one’s own family has become increasingly rare.

As a result, desperate prospective personal loan borrowers have essentially turned to shopping for cosigners. Craigslist, the online user-generated advertisement and posting website, has seen a slew of postings for personal loan cosigners, as reported by CNN and CBS.

CNN reported that posters were even hoping to entice potential personal loan cosigners by offering cars and tractors as collateral. Additionally, the report also found that some individuals were seeking a personal loan cosigner in exchange for equity in their company.

In a CBS report, it was found that some posts on Craigslist offered up thousands of dollars in compensation for a willing cosigner to sign on a personal loan.

While many posters on Craigslist may be well meaning, they fail to realize that they are exposing themselves to scammers and unscrupulous individuals looking to take advantage of people in need. Some of the posters were told to pay thousands up front or to pay money in order to be matched with a cosigner, according to the CNN report.

So long as people fail to improve their credit scores, they will inevitably be forced to seek out cosigners. While everyone hopes they have understanding and financially healthy family members, the fact remains that many families have had their collective credit histories damaged through no fault of their own.

A small ray of hope may lie in the slow trend of increasing jobs. Time will tell if this job growth leads to more financially healthy individuals who are worth of lending to in the eyes of lenders. Once that happens, then demand for cosigners, and the desperation of so many borrowers, will be reduced.