Should You Get A Credit Card Co-Signer
Not everyone has a great credit score. Your score is largely determined by your credit history and how much you have paid back on debt you have owed. While it is always encouraged to be responsible with your personal finances, sometimes life gets in the way. You may have become unemployed for a period or had major expenses which caused a strain on your bank balance. For whatever the reason, your credit score could have been affected by your inability to pay back on debt accrued.
When applying for a credit card, your credit score and history will be a major factor. A bank or financial provider will determine your suitability for a credit card depending on what you have done in the past. This will determine the type of credit card, the credit limit, and several other features. It could be the case that you are totally refused a credit card outright.
In this context, it might be worthwhile investigating the possibility of a co-signer.
The Right Fit
A co-signer is someone who is willing to be on the hook for your personal finances. If you, for any reason, do not pay your credit card debt, they will become responsible. In becoming a co-signer on your account, they become liable for any debt that you could neglect to pay.
A co-signer could be ideal for someone who has little to no credit history. University students are a perfect example of such cases. It is likely that a student straight out of high-school will have little to no credit history. Due to this fact, they can often find it difficult to get access to a sufficient level of credit. While student credit cards are an option that many students avail of, personal circumstances might dictate the need for a higher credit limit. If you are someone who falls into this category, then you could potentially look at finding a co-signer. A parent or guardian are often people that students will use as a co-signer on their application. Parents will likely have an extensive credit history and therefore have greater access to credit from financial providers.
Things To Consider
There are important things to consider before inviting a co-singer on to your credit card account.
Your credit score will be tied to that of your co-signer. If you are someone who consistently repays on debt within an appropriate time limit, then you should not have much to worry about. In fact, if your credit score receives a boost during your time with your co-signer, then they will also benefit from this effort. However, if you are not responsible for paying back debt, then your co-signer will also suffer the consequences of this.
As a result of your impact on your co-signers personal finances, your personal relationship could be affected. You are making someone responsible for your financial habits, be they for bad or good. If something happens that could hamper the credit score of your co-signer, this could have a negative effect on your personal relationship.
You can no longer shy away from your personal financial habits when someone else is also responsible. If you are reckless with your credit limits or living beyond your means, you will have to address this. Not everyone is comfortable with someone else holding them to account for their financial habits. However, this is something that you will need to address with your co-signer before you agree to any contract.
You should agree and end date with your co-signer. Whether this be a parent or a friend, there will come a time when you need to stand on your own two feet financially. Keep a time limit on the period in which you need a co-signer and strive to establish a good credit score on your own. When that time comes, contact your bank or financial provider and request they remove the co-signer from the account.
There are alternatives to adding a co-signer to your credit card account. It is understandable that the practice is not for everyone. It could be the case that you might not have someone suitable or willing to sign for your credit. Or it may be that a personal credit card is not the right option for you at this time.
You can always become an authorised user on someone else’s credit card. While you are authorised to use the other person's card, you are not responsible for the debt acquired. This might be a suitable option for a university student. A parent or guardian can give a student access to their credit card by naming them as an authorised user. This may remove the burden of having debt in your own name.
You can also avail of the option of getting a secured credit card from a bank or financial provider. This is where a credit card is backed by a cash deposit. This removes much of the risk for the card issuer, as they already have a cash deposit. This might be a better option for some users rather than finding a co-signer.