Which credit card issuers authorize co-signers? – Councilor Forbes

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Unlike other forms of debt, credit cards generally do not allow co-signers. In fact, some major credit card companies openly state on their site that they will not accept a co-signer.

If they’re so unpopular, why is all this about co-signers?

Despite the reluctance of many financial institutions to allow co-signers, almost all of them mention a co-signer as an option to create a loan or obtain a credit card.

There are a number of reasons why you might need a co-signer. If you haven’t established credit yet or have poor credit, adding a co-signer could help you get a credit card.

You may also need a co-signer if you are under 21. The 2009 Card Art requires applicants between the ages of 18 and 20 who cannot demonstrate an independent ability to make their minimum payments to have a co-signer on their credit card account. The co-signer can also take the form of a joint holder or a guarantor.

The commitment of a co-signer

Forcing yourself to be a co-signer can have a significant impact on your personal credit. A co-signer agrees to cover all the credit granted to the cardholder if the latter is unable or unwilling to pay. If the cardholder does not make a payment, the co-signer is required to cover the debt.

Additionally, while being a co-signer doesn’t improve your credit score, it can negatively impact your credit if the cardholder misses payments. For this reason, many co-signers are parents or other close family members. By acting as a co-signer, you tie your personal credit score to the behavior of the cardholder. Before committing to being a co-signer, think about the pros, cons, and alternatives.

In addition to the financial obligation, the co-signer must be over the age of 21, demonstrate the ability to make minimum payments on the line of credit, and have sufficient credit to qualify for the credit card.

Where to apply for a card with a co-signer

Currently, no major financial institution allows the addition of a co-signer during the application process, as you will see on student loan applications. However, after investigation, Bank of America offers a similar option.

Bank of America

According to bank officials, Bank of America does not offer credit cards that authorize co-signers. However, if a student applies for a credit card and it is declined, the bank will send a letter of guarantor. A guarantor has the same financial obligation to repay any money the cardholder borrows and is unable to pay.

However, Bank of America is moving away from the term co-signer, this may be because the initial request does not allow adding a co-signer in advance. This is probably due to the more clearly defined collection process. While a co-signer is obligated to pay any missed payment, a guarantor agrees to pay the debt if the cardholder defaults.

A Bank of America representative also indicated that if a card applicant is approved, they can add an additional co-applicant. In this case, the original applicant should have sufficient credit to independently qualify, and then the applicant with insufficient credit or income could be added later.

Local banks and credit unions

If you are determined to explore the option of co-signing, you may want to consider local banks or smaller credit unions. If the co-signer is an existing consumer, co-signature can still be an option.

Other options

If you don’t qualify for a credit card as an individual, there are a variety of alternative options to consider.

Joint accounts

Banks like Wells Fargo and US Bank allow joint accounts or co-applicants. In the case of co-applicants or a joint account, the names of both parties appear on the credit card and are entered on the invoice. Co-owners and co-applicants each receive a credit card. And both account holders are responsible for the monthly payment, regardless of who made the purchases.

Activity on joint accounts is reported to both parties’ credit bureaus and has a positive impact on your credit score for demonstrating responsible behavior or negatively for missed payments or other risky activity.

Authorized users

Instead of co-signing someone else’s card, you can add them as an authorized user or signer of your card. This option allows you to extend your credit to another person by allowing them to make purchases.

This choice gives you more control over the impact on your credit. You remain solely responsible for the credit card and can choose to remove the authorized user at any time. The authorized user is not configured to make payments to the card provider, so if a payment agreement is desired, you can organize it directly with the authorized user.

Registering someone as an authorized user can help build their credit. The authorized user will benefit from the payment activity and each on-time payment made while the user is authorized on your account will improve their credit score as well as the length of time they are open for the credit account.

Secured credit cards

A secured credit card is a fantastic option for creating or replenishing credit. Although most credit cards allow unsecured debt, your credit limit is secured by a savings account that contains the credit limit your lender grants you. For example, if your secured credit card offers a $ 500 credit limit, you will deposit $ 500 with that card provider while making your regular minimum payments.

A secured credit card builds your credit in exactly the same way as an unsecured card. And once you have a sufficient history of timely payments, the cardholder can reassess your credit risk and move you to an unsecured card. At this point, they would pay off the balance of the connected savings account.

Final result

Serving as a co-signer can have a negative impact on your credit. Before making this commitment, state whether you will be notified of account changes and ensure that you are in a relationship of trust with the cardholder. You may want to request a credit limit that you can safely cover if needed.

If you don’t have credit or your credit rating is low, consider a credit card to help rebuild your credit. You may be able to qualify individually. If you are a student over 18 but under 21 and can show proof of income, you will likely qualify for a student credit card without a co-signer. However, your credit limit will be based on the bank’s determination of your ability to pay.

In general, most major banks avoid credit card co-signers. If you are having trouble getting a credit card without a co-signer, consider a secured credit card or have a relative add you as an authorized user.

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