Credit Cards With a Cosigner

What Is a Cosigner on a Credit Card?

A cosigner on a credit card is someone who agrees to pay back any debt that the main cardholder cannot. The cosigner helps the primary cardholder get approved for the card by serving as a guarantor, but they don’t have access to make purchases on the account, unlike with joint credit cards.

During the application process, the credit card company relies mainly on the cosigner’s credit and income, as they will be the person responsible for the debt. This can help people with low credit scores and low incomes get approved for much better cards than they’d normally qualify for. The account will also appear on both people’s credit reports, and can affect both of their credit scores based on how responsibly the cardholder uses it.

Can You Apply for a Credit Card With a Cosigner?

No, you cannot apply for a credit card with a cosigner with any of the top 10 credit card issuers, but you may have luck applying with a cosigner at a local bank or credit union. Some issuers allow you to add a co-applicant after your application is already approved, but that means you’ll have a joint account rather than a cosigner.

If you want your own card and don’t have the necessary credit score or income, you do have some options, like becoming an authorized user, being added as a joint accountholder or even getting a secured credit card.

Major Credit Card Company Cosigner Policies

Since getting a credit card with a cosigner is difficult, it’s a good idea to seriously consider alternatives that provide some of the same benefits.

Alternatives to Getting a Cosigner

1. Become an authorized user. As an authorized user, you will get a credit card with your name on it and you’ll be able to make purchases, but you’ll share a credit line with the primary cardholder. The primary cardholder is responsible for paying off the card balance, and you will not be legally responsible for payment. The account will appear on your credit report and can help you build credit if the primary cardholder handles the card responsibly.
2. Add a joint accountholder. Only two major banks will allow you to add a joint accountholder to an existing credit card account: Bank of America and U.S. Bank. With joint accounts, both accountholders are equally responsible for making payments, no matter who made the purchases. Late or missed payments, or high credit utilization, will hurt the credit scores of both people on the account.
3. Get a secured card. Secured credit cards are easy to get by yourself, even if you have bad credit and a low income. Secured cards offer nearly guaranteed approval because they require a security deposit to open the account. The deposit serves as collateral for the issuer and also sets your spending limit. Secured cards help you build credit just like any other credit card, and they don’t appear any differently on your credit report.

Benefits of Having a Cosigner on a Credit Card

There are a few key benefits of having a cosigner on a credit card. For example, you’ll likely have an easier time getting approved, assuming your cosigner has better credit and income than you do, and you’ll be able to get access to better card terms and benefits than you would by yourself.

Even though applying with a cosigner is an unlikely option, since none of the major card issuers allow you to apply with a cosigner, you may be one of the lucky few who finds a small bank or credit union that does allow it. If this is the case, it’s important to note that applying for a credit card with a cosigner is only a good idea if both parties trust each other and aren’t prone to  financial or relationship problems. In addition, the cosigner must have good enough credit to qualify for an above-average credit card offer and enough income to comfortably handle an additional line of credit.

Key benefits of having a cosigner include:

Helping Students or Other Young People Establish Credit History

It’s a good idea to begin adding positive information to your major credit reports at a young age (preferably as soon as you turn 18 years old) so you can enter the “real world” ready to take advantage of attractive loan rates, credit card offers, job opportunities, auto leasing deals, and/or housing situations (as long as they’re within your means, of course).

Adult students can get approved for a credit card on their own – even if they’re under the age of 21 – as long as they have the income/assets needed to at least make monthly minimum payments. But if you don’t have that income, asking a parent to cosign is a prudent option.

Helping People With Past Credit Mistakes Rebuild

If your credit score has dropped due to a missed payment or other financial mistakes made when you were “young and dumb,” using a cosigner to get a new credit card is one way to expand the options at your disposal. That’s assuming you’re now in a position – both financially and emotionally – to handle the responsibility of being a credit card user. A close friend or family member definitely knows you better than your credit card company and might therefore be willing to help you rebuild by being a cosigner.

Providing an Emergency Line of Credit

Few credit card options available to people with damaged or limited credit come with any spending power to speak of. That’s problematic for folks who require a new credit line in order to finance emergency expenses – car repairs so they can get to work, for example. A cosigner could enable those individuals to get a card with a higher limit.

Taking Advantage of Lucrative Offers

Credit card companies are known to offer attractive sign-up perks like rewards bonuses worth a few hundred bucks or long-term 0% financing deals. You typically need above-average credit to get them, though. Finding a cosigner therefore presents an opportunity for someone with below-average credit to earn extra rewards or save on big-ticket purchases.

Credit Card Cosigner Risks

In general, it’s a bad idea to have someone cosign for a credit card if there’s even the slightest chance that you won’t be able to pay for what you ultimately charge. The same is true if you don’t have a rock-solid relationship with the person who would be cosigning for your account.

After all, a cosigned credit card gone wrong can result in:

Potential Credit Score Damage for Both Parties

A credit card cosigner is fully responsible for the account they lend their name to. This account will be listed on both the main accountholder’s and the cosigner’s credit reports, and irresponsible usage will come back to haunt both parties. Even though the cosigner didn’t directly mismanage the account, their mistake will have been putting faith in an unreliable friend or family member.

Debt Liability

If you cosign for someone who ultimately racks up a bunch of charges they’re either unable or unwilling to pay for, you’ll be on the hook for cleaning up the mess. This can obviously put you in a tight spot because it’s unlikely that you’ll keep close enough tabs on your friend/family member’s spending habits to factor their debt into your budget. Rather, the unpaid balance will likely come as an unwelcome surprise that you must deal with or risk credit score damage and the threat of a lawsuit.

Ruined Relationships

If things don’t go according to plan, debt and credit score damage can strain or break your relationship. Good friends are a rare commodity, so it’s very important to consider the consequences of a cosigned credit card gone wrong. With that in mind, the potential cosigner should lay out some ground rules for the primary applicant ahead of time.

Bottom Line: Should You Apply for a Credit Card With a Cosigner?

While major credit card issuers do not accept cosigners, you may find some smaller banks or credit unions that still do. In that case, you should carefully consider why you want someone to cosign your credit card application, as well as how your relationship and financial dynamics mesh with a cosigner situation, before ultimately pulling the trigger.

In the end, you should get a cosigner if doing so will save you money with a great credit card offer you wouldn’t normally qualify for, and you are confident you will be able to pay your bills as well as maintain a good relationship with the cosigner.

Credit Card Cosigner Video