Not all credit card companies allow a co-signer on a credit card application, but most card companies will usually consider your credit application if you have a co-signer who has a high credit score and adequate income to repay the debt. Although having a co-signer can make it easier for you to get credit, you must handle the credit responsibly so that you don't put the co-signer's credit score at risk.
What Is a Co-Signer
A co-signer is often a parent, spouse or other relative who is willing to be fully responsible for repaying your debt if you default on your credit card payments. Not only must the person pay the balance of the debt you owe, but he also may be left paying interest and penalties on the account. The credit card issuer will consider the account as much the co-signer’s account as the applicant’s. As far as the creditor is concerned, the credit card bills you accumulate are the co-signer’s bills as well.
Advantages of Having a Co-Signer
You have a better chance of getting your credit card application approved if you have a co-signer who has both a good income and an established credit history. If the person has an excellent credit rating, you may be able to qualify for a credit card with a lower interest rate. Depending on the co-signer’s credit score and income, you may even get a higher line of credit. Once you’re approved for a credit card, you have the opportunity to build your own credit history and increase your credit score. This will allow you to get credit on your own one day.
Who Needs a Co-Signer
Generally, young adults under the age of 21 who are college students or don’t earn enough income to qualify for credit need a co-signer to get a credit card. Individuals with few assets or no credit history can sometimes get a credit card if another person co-signs the application.
Disadvantages to the Co-Signer
When you ask someone to co-sign a credit card application for you, that person is putting his good credit at risk if you don’t pay. Even if you don’t default but make late payments, it’s going to negatively affect your co-signer’s credit score along with your own. The amount of the credit available on the card that you use can also lower the cosigner’s credit score. What it does is increase the total of the debt that person has. Having a debt-to-income ratio that is too high could prevent that person from getting new credit in the future.
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.