Pros and Cons of Having Someone Co-Sign on a Credit Card For You

It is all too common for someone to be in the position of not being able to secure a credit card (or at least a credit card with good terms) using solely their own credit. Sometimes this is because the individual is young and has not established his or her own credit yet. Other times it is because financial problems in the past have caused the individual to accumulate a history of bad credit. In either case, if you find yourself in this position then you may consider asking someone that you know to co-sign on a credit card or loan for you. This would allow you to utilize their credit in order to secure a credit card. There are both pros and cons to doing this which you should be highly aware of before proceeding.

Pros of Having Someone Co-Sign on a Credit Card

There are definitely benefits of having someone that you know co-sign on a credit card for you. These benefits include:

• You get the loan or credit card. You wouldn’t have gotten it otherwise so being able to get it with the help of a co-signer is clearly a benefit.

• You get better terms. You may be able to get a good interest rate or even some cash back rewards if your co-signer has good credit.

• A fresh start. Many people find that they can rebuild their own good credit once they have the responsibility of making sure to make on-time credit card payments to a credit card bill that has a co-signer on it.

Cons of Having Someone Co-Sign on a Credit Card

There are also drawbacks to having someone co-sign on a credit card for you. These are serious drawbacks that you should carefully review before deciding that getting a co-signer is a good idea:

• Having to ask. Frankly it’s not any fun having to ask a parent, friend or family member if you can use their credit. It’s embarrassing to admit that you can’t get a credit card on your own and you have to deal with the nuances of the whole conversation. You also risk hearing “no”.

• Added responsibility. You already have a responsibility to pay off your credit cards and be responsible with them but that responsibility is heightened when you are using someone else’s credit to obtain a loan. This can be a lot of pressure for some people.

• Damage to the relationship. If you do find that you have trouble paying off the debt that you acquire on someone else’s credit, you may discover that this does serious damage to your relationship.

• Power imbalance in the relationship. One of the specific problems that can come up in a relationship where a co-signing situation has occurred is the issue of power. Someone holds power over you when they help you financially. This is a serious thing to consider.

Clearly there are benefits to having someone co-sign for you to get a credit card, especially when you aren’t going to be able to get the card without their help. However, there are risks to your finances and your personal relationships which must be weighed against the financial gains.