How to Cosign a Credit Card and What to Expect

Cosigning a credit card involves adding another person to an application to help them qualify for credit they might not otherwise obtain. This arrangement can be beneficial for individuals with limited or no credit history seeking to establish or rebuild their financial standing. Understanding the process and responsibilities involved is important for both parties.

Understanding Credit Card Cosigning

Cosigning for a credit card means the cosigner formally agrees to take on the legal obligation for any debt incurred if the primary cardholder fails to make payments. This reduces risk for the credit card issuer by adding another responsible party. The purpose of cosigning is to enable someone with a developing or insufficient credit profile to access a credit card, leveraging the cosigner’s stronger financial standing. Both the primary cardholder and the cosigner become equally liable for all charges and balances on the account.

Preparing to Cosign

A potential cosigner must meet eligibility requirements to support a credit card application. Requirements include being of legal age, maintaining a good to excellent credit score, often 670 or higher, and demonstrating a stable income. The cosigner will need to provide essential personal information and documentation during the application process, such as their full legal name, current address, Social Security Number, proof of income, and employment details.

Before proceeding, the cosigner should review their own credit report to understand their existing financial obligations and credit health. It is important to discuss the credit card’s terms and conditions, including interest rates, fees, and credit limits, with the primary applicant. Not all credit card issuers offer the option for cosigners; while it is less common for general credit cards, some smaller banks, credit unions, or student-focused cards may permit it.

The Cosigning Process

Once both parties are prepared, the credit card application with a cosigner can be submitted. This involves completing a joint application form, available online, in person, or via mail. The cosigner provides their personal and financial information on this form, alongside the primary applicant’s details. They will need to electronically sign the application or provide a wet signature on physical documents.

Identity verification for both the primary applicant and the cosigner is a standard part of this process. After the application is submitted, a confirmation is provided, indicating an instant decision or pending review. A “hard inquiry” will be placed on the credit reports of both the primary applicant and the cosigner as part of the credit assessment.

Managing the Cosigned Account

The cosigner assumes joint financial responsibility for all debts incurred on the credit card account. This means that if the primary cardholder fails to make payments, the cosigner is legally obligated to cover the outstanding balance, including any accrued interest and late fees. The activity on the cosigned account, whether positive or negative, will appear on both the primary cardholder’s and the cosigner’s credit reports. Consistent, on-time payments can positively contribute to both parties’ credit scores, while late payments or defaults can significantly harm both credit profiles for an extended period, potentially up to seven years.

Given this shared accountability, it is important for the cosigner to actively monitor the account’s activity and payment status. Regular communication with the primary cardholder about their spending and payment habits is advisable. Removing a cosigner from an account can be challenging, as most credit card issuers do not have a straightforward process. Removal may require the primary cardholder to demonstrate sufficient creditworthiness to qualify for the card on their own, or the account may need to be paid off in full and closed.