What is the role of a co-signer in a credit agreement?

In a credit agreement, the role of a co-signer is primarily to sign the agreement alongside the main borrower, thereby sharing the debt responsibility. This means that the co-signer agrees to be responsible for the debt in case the primary borrower defaults. The inclusion of a co-signer can help individuals who may not qualify for credit on their own, as the co-signer’s creditworthiness can enhance the likelihood of loan approval.

It is important to note that while a co-signer shares liability for the debt, they do not assume all responsibility; that remains with the primary borrower unless they default. Additionally, a co-signer is not a financial provider in the sense of offering funding for the agreement, nor are they typically involved in managing the repayment schedule. Their primary function is to enhance the credit profile associated with the loan, thereby facilitating approval and potentially better terms for the main borrower.