How does a co-signer become liable?

The correct answer identifies that a co-signer becomes liable by signing the credit agreement. When a co-signer affixes their signature to the agreement, they are legally committing to the terms outlined in that document. This includes the responsibility to repay the debt if the primary borrower defaults.

A co-signer effectively guarantees the loan, providing assurance to the lender that the obligation will be fulfilled, even if the borrower is unable to make payments. This commitment to the loan agreement means that the co-signer shares the financial responsibility.

While other choices may touch upon aspects of the agreement, they do not establish the basis for liability in the same way. For instance, defaulting on the agreement pertains to the action of failing to make required payments, which delineates the consequences of liability rather than the initiation. Managing repayment details could reflect an active role in the loan but doesn't in itself confer liability. Similarly, being inactive in the agreement suggests a lack of engagement but does not negate the obligation established once the agreement is signed. Thus, the act of signing the credit agreement is the definitive action that establishes a co-signer's liability.