If you are in a position with low credit looking for a credit card, one option that you can do to get approved is considering a cosigner to cosign your card with you. A co-signer is someone else who will take full responsibility to pay back the loan or debt that you owe. Having a cosigner on your card gives your bank or credit card company to have assurance that they will get their money back.
In this guide, we will break down everything you need to know about co signing. and whether or not its a good idea or not.
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Who Needs a Credit Card Co-Signer?
In certain cases, a credit card company will need you to sign up for a credit card along with a cosigner to get approved. People who generally need a cosigner are usually because of one of these problems:
- Little or No Payment history: If you do not have much credit history, then you are not super credible. In this case, you would most likely need a credit card Co-signer.
- Low Credit Score: If you have a low credit score it shows that you are no most the credible. Banks may require a co-signer so that you do not run away from your debts
- Low Income: If you are not making a lot of money, a company might require a co signer to make sure you pay your bills in full.
Credit Card Co-Signer vs. Authorized User
A credit card co signer is a joint account where both parties (You and the cosigner) have full responsibility to pay back any debt owed to a credit card company. The co-signer is legally responsible for all of the debt accumulated on the credit card, even though they are not the primary user of that card.
On the other hand, an authorized user of a credit card is someone that is not legally responsible for balances that the primary cardholder accumulates. Authorized users are typically kids or students that have permission to use the account.
Which Credit Card Providers Accept Co-Signers?
Although co signers are great for banks to have more assurance in you, they are not offered by all banks or financial institutions. Here is a list of banks that do and don’t allow cosigners.
| Credit Card Providers That Do and Do Not Allow Co-Signers | |
| Allow Co-Signers | Do Not Allow Co-Signers |
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Risks of Being a Credit Card Co-Signer
If you are thinking of co-signing a credit card for a friend or family member, here are some things to consider:
- You must take full responsibility to pay back debt if co-signer
- Also fully responsible for any late or penalty fees
- In certain states, the credit card provider can collect debt payment from you without first trying to collect from the primary cardholder.
Because of this large financial responsibility, make sure you are willing to take full responsibility of your co-signer if things were to go wrong.
Conclusion
In conclusion, some banks may require a co-signer and if you are thinking of co-signing with someone, be sure that you guys both have a clear understanding of the credit card terms as both parties will be responsible. If you are not sure about a person’s financial history, maybe its best to wait for someone more financially responsible to co-sign.
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