If you’ve applied for a credit card, but the card issuer is requiring a cosigner, you’re not alone. Cosigners are a common part of financing, especially for new borrowers. It’s a step many people, especially those with no credit or poor credit, need to take to get a credit card.
Many young people, especially students, and those who are trying to regain their credit rating need the helping hand of a cosigner. With the backing of a family or friend with good credit, your chances for approval increase dramatically.
On this page:
- When to Apply for a Credit Card With a Cosigner
- Credit Card Companies That Allow Cosigners
- Alternatives to Using a Cosigner
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What is a Cosigner?
A cosigner is someone who shares the burden and the risk of the credit card. A cosigner lends their strong credit rating to you so that you can access a credit card under your name. Cosigners lower the risk of issuing a card to someone with little or poor credit history.
A cosigner is usually a parent, partner, or another close family member. In rare cases, it is a close friend or associate. It’s recommended only to ask a friend or family member if they understand the risks. A cosigner needs to have the financial capability to take over the credit card bills if you no longer can. Your relationship needs to be strong enough to withstand any pressures of a shared financial burden.
When to Apply for a Credit Card With a Cosigner
Cosigned credit cards are beneficial for people trying to rebuild bad credit history or get their credit history started. Some common examples of when people use a cosigner are if a teenager, who has no previous credit history wants to apply for a card before college, or if a college graduate has defaulted on their student loans, but is looking to rebuild a good credit history when they get a new job. In both cases, a parent or close family member might lend a helping hand.
Getting a credit card with a cosigner puts both your credit and your cosigner’s credit at risk. So make sure you have a stable source of income and a plan in place to make credit card payments on time and in full each month. Make sure that both you and your cosigner are in good financial standing before agreeing to this contract.
Credit Cards Cosigner Policies
Just because you want a credit card and have a cosigner doesn’t mean a provider will issue you a credit card. Most credit card providers don’t allow for cosigners. From their point of view, a cosigner equals an increased credit risk.
The following providers allow for cosigned credit cards, according to Experian:
- Bank of America
- U.S. Bank
- Wells Fargo
Those that do not, include:
The rewards of credit cards with cosigner are clear, you get the chance to build a good credit history. A cosigner makes a credit card application feasible. It helps those who have little experiencing managing money and credit. It’s the first step toward establishing credit, or to getting your credit history back into the green.
Among the risks, if you, the primary cardholder, falter on payment, both you and your cosigner take the hit to your credit score. Whatever happens during the life of your credit card affects both parties score.
Credit Card Cosigner Alternatives
If a cosigner credit card doesn’t work for your specific financial situation, it’s not the only way to get a credit card. If you have poor credit or no credit, here are other options that might make more sense.
Secured Credit Cards
Most credit cards are unsecured credit, meaning the credit card company issues you credit based only on income and credit score. But if you have low income or a poor credit score, you might consider getting one of the best secured credit cards, which require a cash deposit. Keep in mind, if you fail to make payments, the provider can take action to collect on your deposit.
Becoming an authorized user on a credit card is different from securing a cosigner because you are not the primary cardholder and you technically have no obligation to make payments.
You’ll still need to find someone responsible for becoming the primary cardholder or extending their credit card to you as an authorized user, however. You’ll also need to ensure that the credit card company reports the credit history from the card’s authorized users to the credit bureau. This will ensure you build credit with the authorized account.
>> Learn More: Best Credit Cards for an Authorized User
A Final Word on Cosigned Credit Cards
Credit cards are increasingly necessary in our modern society, which is why finding an option like a cosigned credit card through Wells Fargo, U.S. Bank, or Bank of America can be a good idea. But first, have an honest discussion with your cosigner about the state of your finances.
Author: Jeff Gitlen
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