The act of co-signing involves a promise to pay another person's debt arising out of contract

Contract

A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

 if that person fails to do so. Many realtors and landlord

Landlord

A landlord is the owner of a house, apartment, condominium, or real estate which is rented or leased to an individual or business, who is called a tenant . When a juristic person is in this position, the term landlord is used. Other terms include lessor and owner...

s require a cosigner for college students, people with bad credit

Credit (finance)

Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...

 or people whose income is less than a certain, low multiple of the amount of rent

Renting

Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...

. Other loans typically involving a cosigner are motor vehicle purchase, money loans and mortgages. The statute of frauds

Statute of frauds

The statute of frauds refers to the requirement that certain kinds of contracts be memorialized in a signed writing with sufficient content to evidence the contract....

 existing in most states of the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 requires that any such agreement be in writing and signed by the co-signer in order to be enforceable in a court of law. The legal act or instrument of cosigning is also called a guaranty.

Co-signing a promissory note

Promissory note

A promissory note is a negotiable instrument, wherein one party makes an unconditional promise in writing to pay a determinate sum of money to the other , either at a fixed or determinable future time or on demand of the payee, under specific terms.Referred to as a note payable in accounting, or...

, in particular, may entail significant financial risk

Financial risk

Financial risk an umbrella term for multiple types of risk associated with financing, including financial transactions that include company loans in risk of default. Risk is a term often used to imply downside risk, meaning the uncertainty of a return and the potential for financial loss...

 for the co-signer or guarantor.

A co-signer is a person who is the guarantor of the contract, especially a promissory note. A co-signer is also known as a surety

Surety

A surety or guarantee, in finance, is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults...

.

A co-maker is a person who co-signs a check

Cheque

A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...

 or other draft

Bankers' acceptance

A banker's acceptance, or BA, is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker's acceptance specifies the amount of money, the date, and the person to which the payment is due. After acceptance, the draft...

.

If you co-sign in the United States, it will show up on the cosigner's credit report