Key takeaways

  • Most major credit issuers no longer allow co-signers, although a few issuers allow you to create joint accounts with another person.
  • Becoming a credit card co-signer comes with significant financial risk and should not be taken lightly.
  • There are many alternatives to applying for a credit card with a co-signer, including becoming an authorized user, applying for a joint credit card and taking out a secured line of credit.

In the past, applying for a credit card with a co-signer — that is, another person who agrees to share responsibility for charges made on the card — was a common way to increase your credit card approval odds. However, most major credit issuers have phased out this option, which means you are no longer able to use a credit card co-signer to build a positive credit history.

That said, a few credit cards, including the Apple Card*, allow you to create a joint credit account with another person, which could also help build a positive history. Joint accounts are just what they sound like, they’re co-owned by both individuals, as compared to co-signed accounts in which the co-signer has no power within the account, but is simply the guarantor.

Here’s what you need to know about co-signers and joint credit cards, as well as other options for people who want to build their credit quickly.

What credit cards allow a co-signer?

The major credit card issuers we contacted no longer allow co-signers. That list includes American Express, Bank of America, Capital One, Chase, Citi, Discover and Wells Fargo.

You’re most likely to find a co-sign option with smaller credit unions or regional banks. If you do got that route, there are a couple of things to keep in mind.

What to know before you co-sign a credit card

It sounds like a nice thing to do. Just sign your name, and a friend or relative will gain access to credit. Like most things in life, however, being a co-signer is not that simple. Financially, “co-signing is probably the worst thing you can do,” says John Ulzheimer, a nationally recognized credit expert who has previously worked for both FICO and Equifax.

Judging by the complaints and lawsuits made by co-signers, it also seems to be one of the least understood arrangements, he says. When friends and relatives co-sign, they often don’t realize the new card debt is also 100 percent theirs. Often, the potential co-signer has a relationship with the hopeful account holder. That, too, can be jeopardized. According to Ulzheimer, with the potential for complications — personal and financial — there are too many downsides to co-signing.

1. You are responsible for all charges made on the card

What does a co-signer do? When you agree to co-sign for a credit card, here’s what you’re telling the credit card issuer: “If anything goes wrong, I’ll pay the balance. All of it. Plus interest and any penalty fees.”

Some people assume that co-signing a credit card is the same thing as serving as a reference. This isn’t the case. When you co-sign a credit card, you are taking co-ownership of the credit account — which makes you legally responsible for all charges made on the card.

You (the person with good credit) are promising to pay the entire bill because the lender doesn’t think the applicant is quite up to the task. The lender has seen the applicant’s credit report and financial information and has determined that the person does not have the necessary credit to maintain the account on their own.

Before you co-sign a credit card, Ulzheimer suggests asking the friend or relative why they are looking for a credit card with a co-signer.

If the person has bad credit, that means they might be a potential credit risk — that is, they might miss payments or default on their debts. That’s not a good sign for you since you’ll be stuck with any unpaid bills.

If the person’s income isn’t high enough to qualify for the credit card they want, it might mean that they don’t have enough money to pay their current bills as well as an additional credit card bill — another bad sign.

Is the person needing the co-signer younger than 21? Students 18 years old and older aren’t barred from getting credit cards, Ulzheimer explains, but they’ll have a harder time opening a line of credit if they don’t have the income to pay the bills.

2. The extra debt could affect your ability to get new credit

Are you planning to buy a home or take out a loan for a large purchase? Before determining your eligibility and interest rate, lenders will look at your debt load — including the co-signed account.

“That account will impact your score no differently than if you were the only person on that account,” says Barry Paperno, a credit scoring expert who has previously worked at FICO and Experian. As far as creditors and potential creditors are concerned, the account is yours.

Every consumer can handle only so much debt. If this card pushes you into the danger zone in the eyes of your own creditors, you risk paying higher interest rates on your own credit cards and any future loans — and your next credit card application might even be denied.

3. Your credit score could go down

Does being a co-signer affect your credit? Yes. It can lower your credit score — and it might even cause long-term damage to your credit history.

Why? Two reasons.

First, nearly all credit-scoring formulas base a percentage of your score on your current balances versus your available credit. This is called a credit utilization ratio, and it makes up 30 percent of your FICO credit score. The less credit you use, the better, Ulzheimer explains. If your friend or relative uses a significant chunk of the available credit on a co-signed card, it could lower your score even if the account holder makes on-time payments every month.

Second, if the account holder makes late payments or begins missing payments, their actions will also show up on your credit report. In the eyes of creditors, this is your account, so “you’re equally at risk for any sort of negative credit reporting and/or collection activities,” says Ulzheimer. Since derogatory marks can remain on your credit report for as long as a decade, co-signing a credit card can be riskier than you realize.

4. The account holder could increase the credit limit without your consent

The Credit Card Accountability, Responsibility and Disclosure Act, or Credit CARD Act, mandates that while the account holder is younger than 21, the co-signer has to give written permission for any credit limit increases, says Chi Chi Wu, senior attorney with the National Consumer Law Center.

However, once the cardholder is past the age of 21, no federal law requires that the co-signer be notified of any credit line increases, she says.

Some people, for example, decide to co-sign a credit card when their child goes off to college believing that if anything goes wrong, they can just write a check for their child’s relatively small card bill. But if their child keeps the credit card account open past their 21st birthday and begins increasing the credit limit, the bill could end up being quite a bit more than their parents estimated.

5. If you want out, you might have to close the credit card

Do you want to be responsible for your friend or relative’s credit card bill for life? If not, you need an exit strategy.

Often, ending the co-signing arrangement requires closing the card account, says Nessa Feddis, senior vice president at the American Bankers Association.

Closing a credit card account comes with a few downsides, and closing a co-signed credit account adds one more wrinkle. Depending on the contract and your state laws, you may need the cardholder’s cooperation, Feddis explains. It may not be as simple as just telling the card issuer you want out.

Plus, any unpaid debts accumulated while the co-signed account was open are still your responsibility, even after the account is closed. Until they’re paid, they’re your bills, too.

If you are considering co-signing, call the credit card issuer first to find out exactly what your options are for ending the co-signing relationship, Feddis says. Do you have to close the account? Do you need the account holder’s permission?

While you’re at it, ask about your co-signer rights, including your right to access account information. Can you get account status and balance information as a co-signer? Will you be told if the credit line or interest rates change? Will you be notified if payments are late or if the account is heading for default?

Knowing this will help you be prepared if you co-sign and things go south.

Alternatives to finding a co-signer

Since most credit issuers no longer allow people to apply for credit cards with co-signers, you’ll need to look for alternative ways to access credit.

If you have bad credit or a limited credit history and are unlikely to be eligible for one of the best credit cards, here are a few ways to build credit without a co-signer.

Become an authorized user

One of the best ways to build credit quickly is by becoming an authorized user on another person’s credit card. When you become an authorized user, you receive authorization to make purchases on another person’s credit account. The account owner is responsible for all payments and any debt incurred.

Most credit card issuers report authorized user accounts to the three major credit bureaus (Experian, Equifax and TransUnion). This means that every time the account owner makes an on-time payment, for example, it shows up as a positive record on your credit report, which boosts your credit score.

Becoming an authorized user is an easy way to piggyback on someone else’s good credit while building your credit score, especially if you’re a student or young person who isn’t old enough to open a credit card of your own.

Apply for a joint credit card

In some cases, you may be able to apply for a joint credit card. Joint credit cards are exactly what they sound like: a credit card issued jointly to two people (spouses, for example), both of whom have access to use the card and manage the account and are legally responsible for any debt incurred on the card. All activity on the card is reported to both cardholders’ credit reports, which means that if you both use your joint card responsibly, you could both receive a credit boost. Likewise, if one or both of the joint account holders handles the account poorly, both of your credit scores could see a dip.

In that way, joint accounts are as dangerous as co-signed accounts, so think carefully about entering this type of agreement.

If two people with significantly different credit scores apply for a joint account, it’s possible the person with the higher score will not be able to offset the lower the person’s score and, therefore, the application will be denied.

Only a few credit cards, such as the Apple Card, allow joint accounts. If you’re considering becoming a joint cardholder, make sure you’re prepared to take full responsibility for any charges made on the card. Also, make sure that every payment is on time, regardless of who makes the payment.

Apply for a secured credit card

If you want to apply for a credit line of your own, without becoming an authorized user or looking for a joint credit card, consider applying for a secured credit card. These credit-building cards require a small security deposit in exchange for what is generally a small credit limit, allowing you to prove that you can handle credit responsibly.

Once you’ve demonstrated your ability to make on-time payments and manage your line of credit, most credit card issuers will return your security deposit and graduate you to an unsecured credit card. Secured credit cards can be rewarding, especially if you choose a card that offers cash back rewards or other rewards, but remember the primary goal with a secured card is helping you build your credit with responsible use.

Consider credit cards for people with limited credit

Want more options? You might want to look at our lists of the best credit cards for people with bad credit and credit cards for people with no credit history.

Many of these cards are secured credit cards, but these lists also include unsecured cards designed for people with fair credit, such as the Petal® 1 “No Annual Fee” Visa® Credit Card*, which may use factors like income and bill payment history to determine eligibility, offers cash back rewards on select purchases and allows cardholders to earn a credit limit increase after six months of card ownership.

The bottom line

Even though most major credit card issuers no longer allow credit cards with co-signers, there are still ways to build credit even if you have a low credit score or a limited credit history.

Consider becoming an authorized user, applying for a secured credit card or looking for a card designed to help people build credit. Once you have a line of credit of your own, make sure you practice responsible credit habits to establish a positive credit history and build your credit score.

*The information about the Apple Card and Petal® 1 “No Annual Fee” Visa® Credit Card has been collected independently by Bankrate. The card details have not been reviewed or approved by the card issuer.