You have two people. Person G has good credit -- high income, little debt, never pays late, responsible credit card usage, etc. Person W has worse-than-G-but-not-bad credit -- significantly lower income than G, but also little debt, couple of late pays (on credit cards) a year but never has defaulted on anything.
Given that, what will banks consider lower risk (and so give more
favorable conditions/rate to)? A loan application from G alone or a
joint loan application from G and W?
Naively I'd think that the joint application would be considered lower
risk -- both G and W are (I would expect) jointly and severally liable
for payment so if W totally flakes out G is still fully on the hook
and the loan is then no worse than a loan to G alone. So it would
seem to me that G would set a ceiling on the riskiness of the loan
since anything short of W contributing nothing means there are more
resources to pay back the loan than G on his own.
But is that really the case in the credit-granting world?
Rich Carreiro email@example.com
- posted 9 years ago