When you need a loan before you have enough positive credit history to qualify, you can get someone to cosign with you. This person agrees to make payments on the loan if you fail to. The loan, along with all of the payment history, appears on both your credit report and the cosigner's credit report. This debt liability could affect the cosigner's ability to obtain credit on his own, so the cosigner might want to be released from the obligation. There are two major methods to remove a cosigner.
Instructions
Apply for Release
1. Make consistent on-time payments on your loan for at least one year. Some lenders want to see two or more consecutive years of on-time payments, but you can at least ask after one year.
2. Check your credit report and see if there are any errors on it. If there are, follow the instructions on the credit report to dispute them so they will not affect your credit score. The lender will check your credit to ensure that you are responsible enough to handle the loan on your own before releasing the cosigner.
3. Contact your lender and ask for an application for cosigner release. Not all lenders offer this, but if they do, it is the simplest way to remove the cosigner.
4. Fill out the application for cosigner release and mail it back to the lender. You should receive a decision shortly.
Refinance Loan
5. Follow the procedure above to attempt to get the cosigner released. If your lender does not offer cosigner release or if you do not qualify, your only option is to pay off the loan and get a new one on your own -- also known as refinancing.
6. Look at your most recent loan statement to find the outstanding balance. This is the amount you will need to refinance.
7. Call your current lender or another lender and ask about the procedure for applying to refinance your loan.
8. Fill out the required documents to apply for the refinance. If you get it, this will pay off the old loan and release the cosigner, leaving you with a new loan without the cosigner.
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