What is a Co-Applicant Credit Card?
Qualifying for a credit card can be difficult, especially for young people who have yet to establish any kind of credit, recent immigrants, or for those with low income. For those in these kinds of situations, having a co-applicant can be advantageous.
What is a co-applicant?
A co-applicant is another person who signs onto the card with you. Similar to a joint-applicant for a loan, a co-applicant offers their personal information and the two of you share the benefits and responsibilities of the card together. It is common for husbands and wives to have joint credit cards, as well as parents who sign for their children.
How is a co-applicant different from an authorized user?
A co-applicant differs from an authorized user in a few crucial ways. Firstly, let's look at the similarities. In both cases, both parties are affected by the usage of the card on their individual credit report. The credit card reports monthly to the credit bureaus for any parties connected to the account, regardless of who incurred the charges. That being said, an authorized user is not the financially responsible party on a credit card. While the use of the card affects an authorized user's credit history, he or she is not held responsible for paying the bills on the card. A co-applicant, however is affected in terms of his or her credit report, and is also held financially responsible. His or her name on the credit card application is a promise to use the card responsibly and pay promptly and in full.
What are the drawbacks to having a co-applicant credit card?
There are serious dangers to having a co-applicant credit card. While teaming up with someone who has a great credit rating can certainly help a young person establish good credit, there are risks involved. As previously mentioned, a co-applicant has his or her activity on the card reported every month. So if your co-applicant decides to go on a shopping binge and use up a significant portion of the available credit, this will reflect badly on your credit. Likewise, if bills are paid late by either party, your credit score will negatively reflect this. Looking down the road even farther, should your co-applicant make a huge mess of the card, and rack up all kinds of charges and then skip town, you, as co-applicant, will not only be affected negatively by this in your credit rating, but you will also be held responsible for paying off the credit card and any interest charges that may have accrued.
It is important to deeply consider all the factors, as well as to contact your credit card company and find out their policies, before co-signing for a credit card.
About the Author:
Paul Basco Provides Expert opinions and reviews to help you Compare and Apply for a Credit Card Offers online. At GettintingaCreditCard.com, we offer low interest credit cards
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