Being told “no” by a bank when you have non-W2 income for less than 2 years is a common story. Unfortunately, banks have to set up a stringent credit policy and adhere to it in order to keep federal and state regulators off of their back. That policy is going to be universal, but there are ways around it.
The terms “cosigner” and “co-maker” are similar, but have a bit different meaning. A co-signer is someone that agrees to pay in case the borrower, or maker, is unable or unwilling to do so. A co-maker is simply a co-borrower. Honestly, there is very little difference between the two as both a cosigner and a co-maker are still ultimately responsible for the loan.
It is perfectly normal to have a person put up collateral for another person’s loan. This practice is known as “hypothecation”. Most banks that I have worked for will only allow someone to put up their collateral for another’s loan when there is a blood relation between the two. A situation where a parent signs on a loan with their adult child does happen all the time and, if a bank tells you they won’t do it, you’re speaking to the wrong person at the bank.
One thing to keep in mind is, in this day and age, most banks have centralized the decision-making process. When I first started my banking career, we had decision-making authority in the office. In a bid for quality control and cost savings, big banks have steadily put fewer people in control of decision making…and most of those people aren’t in the branch office. With that in mind, many branch bankers don’t have backgrounds in credit, therefore they often don’t think outside of the box.
If you are struggling to obtain a loan on your own due to having less than 2 years-worth of business or commission income and you have a parent that is willing to sign on with you, I would ask your cosigner who their banker is and start there. They probably have already gotten comfortable with your cosigner and they are more likely to lend to them.
If you’ve struggled to get a bank to take you seriously and you have a relative that can help, banks should look forward to doing that deal. Don’t feel bad about asking for help. Everyone needs help sometimes.