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If having no credit or weak credit is making it hard to qualify for a credit card, adding a cosigner to your application could help you get approved. A credit card cosigner is someone with good credit who applies with you and is responsible for the debt if you fail to pay.
Since someone else is promising to settle the bill if you can't, some of the risk is taken away from the credit card issuer, which could help you qualify. Once approved, making on-time payments could help you build credit so you can apply for your next card on your own.
What Is a Credit Card Cosigner?
When you apply for a credit card, the card issuer determines how likely or unlikely you are to pay your credit card debt by reviewing your credit history. If you have limited or poor credit, the issuer may determine you're too risky to lend to and deny your application.
This is where a credit card cosigner might come in handy. Applying with a cosigner who has strong credit scores and a good repayment history could help you get a credit card because they agree to pick up the tab if you don't or can't pay.
Two parties are involved in a cosigner scenario:
- The primary credit card holder: The primary credit card owner has the same privileges and obligations as most credit card consumers, including the ability to make purchases and pay off the balance. However, if the primary card holder can't repay the debt, the payment obligation shifts to the credit card cosigner (just like when there's a cosigner on a loan).
- The cosigner: A credit card cosigner takes the same responsibility as a cosigner would on any other kind of debt: If the primary card holder does not pay the credit card debt, the credit card cosigner is responsible for repaying it.
Pros and Cons of Credit Card Cosigning
The benefit of using a cosigner if you have less-than-stellar credit is that it could help you qualify for an unsecured card that doesn't require an upfront deposit. Plus, managing credit under the watchful eye of a cosigner could help you establish responsible credit habits.
For cosigners, an advantage of cosigning is that you could put your good credit to use by helping a family member, significant other or friend qualify for a card they may not be able to get on their own. But before cosigning, it's important to consider all the responsibilities involved.
Bills that the credit card owner doesn't pay are redirected to the cosigner, who is contractually obligated to pay the bills. At that point, late payments could cause the cosigner's credit score to drop, and disagreements over unpaid bills could cause the relationship to sour.
If you decide to cosign on a credit card, your main responsibility will be keeping an eye on the primary cardholder's spending and whether they are making timely payments since their inability to pay will have financial ramifications for you.
If you're the credit card applicant partnering with a cosigner, your main responsibility is to make at least minimum payments (though it's best to pay off the balance each month) and to not charge more to the card than you can manage.
Credit Card Cosigner vs. Authorized User
Credit card cosigners and authorized users are often confused, but they are two different things. Here's an overview of how both work.
- A credit card cosigner: A credit card cosigner agrees to pay the credit card bill if the account owner on the same card account doesn't pay. Typically, credit card cosigners don't receive a physical credit card, don't get a bill (unless the account owner doesn't pay the credit card debt) and don't have access to the credit card account.
- An authorized user: A primary credit card holder can add an authorized user to his or her credit card account. The authorized user then can use the card to make purchases but is not ultimately responsible for the card payment (that burden falls on the primary credit card holder). Authorized users may see a moderate uptick in their credit scores, assuming the primary user pays bills reliably and those payments are reported to the credit bureaus. Some cards may charge a fee for an additional cardholder; check with your card issuer for details.
Which Credit Card Issuers Allow a Cosigner?
Most credit card providers do not accept credit card cosigners. In fact, U.S. Bank was the only major issuer currently found to offer cosigning.
Credit card providers that do not currently allow credit card cosigners include:
- American Express
- Capital One
- Wells Fargo
Before attempting to apply for a credit card with a cosigner, check with the card provider to find out whether cosigners are allowed. Also, make sure that both the primary cardholder and the credit card cosigner are notified of important card information, like credit limit changes, interest rate changes, and any fees or penalties both parties should know about.
Alternatives to Cosigning a Credit Card
Because so few credit card issuers are currently accepting cosigners, you may have to explore other ways of obtaining and building credit. Here are some alternatives to consider:
- Get a secured card. Secured credit cards work like regular credit cards, but they're backed by a deposit you make upfront, which typically acts as your credit line. After proving you can keep up with payments, you may get your deposit back or be transitioned to an unsecured card.
- Become an authorized user. Another way to potentially build credit is by becoming an authorized user on a family member's or friend's account with excellent payment history. If the credit card issuer reports card payments to the credit bureaus for authorized users, it could positively help your score. With improved credit, you could then apply for your own card.
The Bottom Line
Not many credit card issuers accept cosigners, so you may have to explore other ways of obtaining a credit card and building credit. One option is getting a secured card and building credit with on-time payments. Another option is becoming an authorized user on another person's card and leveraging their positive payment habits to help grow your score.
Lastly, using a tool like Experian Boost®ø—a free service that adds on-time utility, phone and streaming payments to your Experian credit report—could be a way to see some score improvement. Monitoring your FICO® Score☉ through Experian could also help you keep track of where you stand ahead of your next credit card application.