bossfan

How will co-signing a PLUS loan affect my brother's credit?

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Does anyone know if or how student loans, currenty NOT in repayment due to being in school, affect credit ratings?

Also how would it affect the credit rating of my brother, who has perfect credit, if he co-signed a loan for me that is a state loan guarantee corp alternative educational loan ("LINK loan") for adults? They are similar to the PLUS loans for dependents, but require a FICO of at least 680 to qualify (which I don't have) and is for students who are not eligible for Staffords, etc,. but you don't have to pay them until you graduate--which for me is going to be years away.

He is thinking of buying a new vehicle, and is concerned it would change his debt to income ratio or otherwise lower his credit score.

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No one likes to make firm predictions, because it can't really be done for sure in all cases, but there are some generalities:

For starters, whatever the effect, it would be no different whether he is the co-signer or borrower as far as his credit will show.

For FICO, there may be a slight initial drop, then likely a free rise since it will be paid as agreed for many years until go-time. It will also diversify his credit sources which is generally considered desirable.

Debt to Income is not an automatic figure as income is not generally reported to the credit bureaus, but it would be voluntary info for mortgages, cars, and bank lines of credit.

With perfect credit I would only go so far as to say I highly DOUBT it would impact the best rate on a car loan given the competitive environment.

Remember though, that the loans must be repeated and signed for annually and the amounts will keep rising and he will likely continue to get more nervous as time goes on.

The cosigning of the educational loan is usually the firm territory of the parent in which case these considerations should not be in the forefront of the decision, but if they cannot and he's willing to pull up the slack, that would make you one lucky turkey.

Major in something profitable!

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