Accommodation Endorsement

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DEFINITION of 'Accommodation Endorsement'

A written agreement from one entity to back the credit liability of another. This insurance is made without consideration, and adds strength to the creditworthiness of the insured entity. This would usually be made by a parent company to a subsidiary, and allows the subsidiary to take on the parent's credit standing. An accommodation endorsement is similar to a government guaranteeing a third party's debt with its full faith and credit.

INVESTOPEDIA EXPLAINS 'Accommodation Endorsement'

This concept is used in everyday life as well. For example, someone who is young and has no credit established to qualify for a credit card or loan, may be able to qualify if a parent or guardian co-signs. This process is similar to accommodation endorsement.

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