Does It Affect Your Credit to Co-Sign for Someone Else on Their Apartment Lease?

Landlords have basic requirements that a tenant must meet before the landlord will allow him to move in. If the tenant has a previous eviction, or a poor credit score, the landlord may allow him to move in anyway, providing he can find a co-signer. Tenants can use anyone they wish as a co-signer, but you shouldn't enter into the agreement lightly. Co-signing an apartment lease can affect your finances and your credit.

Co-signing Basics

Many landlords accept a co-signer if the primary applicant does not have a good credit history, verifiable income or a good apartment rental history. By co-signing someone's apartment lease, you agree to become the guarantor of the lease. Co-signing the lease does not make you an occupant, or responsible for the security deposit or monthly rent. However, if the primary applicant breaks the lease, the landlord has the right to charge you for any unpaid rent or damages to the rental.

Co-signing and Credit

Most landlords do not report lease agreements and timely rental payments to the three major credit bureaus. Typically, the lease agreement will not appear on your credit report if the occupant continues to make the monthly rent payments. If the occupant defaults on the lease, the landlord may report the unpaid debt to the credit bureaus, which will appear on both your and the occupant's credit report. If the landlord files a civil suit in court against you for the unpaid debt, this will also appear on your credit report.

Effects

If the occupant breaks the lease agreement, the landlord will look to you to pay any unpaid rent, fees or costs to replace damages. The landlord can only charge you for unpaid rent or fees listed in the lease. For example, if the lease agreement states that the occupant must pay the rent for the remainder of the lease, even if the occupant moves out early, then you must pay this amount. If the landlord reports the debt to the credit bureaus, it will appear as a negative mark on your credit report and lower your credit score.

Tips

Use extreme caution when co-signing an apartment lease. While your relative or friend may need a co-signer to get an apartment, only consider doing so if you know and trust the person. Make sure the person has a source of income and can cover the monthly rental payments, or you may have to pick up the slack.

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