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Five Reasons Why You Should Never Co-Sign For A Credit Card

co-signing for a credit card
Written by Shelly Evans

When someone you know is in need of financing via credit card, they might ask you as a co-signer in order to be approved.

While this sounds harmless, there are plenty of legal liabilities about co-signing that you should keep in mind. In general, it is advised to avoid co-signing on a credit card (or loan) for anyone. No matter what your relationship with that person may be.

Here are five reasons why you shouldn’t  go through with it. co-sign for a credit card

You are required by law to pay the bill.

In the event that you co-sign a credit card, you’re agreeing to pay the balance if the card owner cannot. You are bound to this debt by law. The reason you’re required to co-sign is because the creditor don’t think the person taking out the law is qualified enough. This means the cardholder might already have a bad or little credit and probably lacks financial stability.

The cardholder is in control.

If the credit card company decides they are willing to raise the credit limit, the cardholder can accept without your consent. You’re still liable regardless of the increase in credit limit. The worst part is that you won’t be notified if this happens.

Your credit is directly affected.

If anything goes wrong, your credit will be directly affected by the actions of the cardholder. Not only are you liable for the debt, but your personal credit score will take a hit. Especially if payments are not made on time. Or worst, if no payment had been made.

Lenders consider this your debt.

Not only will it hurt your credit but the debt and transactions associated with the credit card will also be associated with the co-signer’s credit. Lenders will see and consider the debt as yours. Even a small amount of debt can sometimes push you into a whole different bracket.

Removing yourself from the contract isn’t always simple.

In many cases, you cannot get out from under this credit card co-sign contract without full cooperation of the cardholder. If something goes wrong, not only are you still tied to the contract but your personal relationship with the cardholder will also suffer. Even if the contract is terminated, you will still be liable for any debts. Your credit score will still be penalized for any lapse in payment while you were still the co-signer of the card.

 

About the author

Shelly Evans

Shelly Evans is a freelance writer and loan consultant. She specialize in writing articles about obtaining financing despite having bad credit. She has more than 16 years in consumer credit and collections and 4 years in business financing.

12 Comments

  • Hi Mason,

    Thanks for taking time to read our article, please feel free to read our other articles. Let me know if there is a subject you are interested in and if I know something about it, I’ll write an article for you!

    Thanks,

    Shelly

  • I actually have co-signed for a credit card for a really good friend. Worst idea ever on my part because he barely paid his debts. I got out of it after a long time, but it was an annoying thing to deal with. I will only co-sign with my wife, never will I ever co-sign with anyone else. No way.

  • There’s a major risk to co signing a credit card for someone. I myself would only do it if I trust the person enough to pay their bill every single month. One single time I end up having to pay I will get very annoyed. I never understood the idea of co-signing for such a thing. I can understand if you’re married and or you do it for your kids, but for friends or other family it just seems way too risky to me.

  • Hi Jack,
    Unfortunately there are more examples of co-signing going wrong then it being a good experience! At least you learned something, and I hope you didn’t let your friend off the hook with telling him how he jeopardized not just your credit, but your friendship! Hopefully he won’t do that to anyone else!

  • Hi Cameron, a lot of people feel pressured to help out a friend or family member. Esp, if that person is suffering because they can’t get the financing they need. Its really a tough thing to do, to say NO in those situations. But for the sake of your own credit and financial well being, it can be necessary. Thanks for visiting our blog and I hope you feel free to comment on more articles!

    Shelly

  • These facts you point out is a big reason why I never co-sign for most things. Credit cards are a big thing I do not co-sign for. The big one I think is that my credit score goes down too and I may need to end up paying something towards their bills, which is something I hate doing and never will do. So yeah, no way to co-signing ever.

  • Hi Ashley, thanks for being a part of our community! Anyone who is asked to co-sign for someone should think long and hard about it! It often ends in disaster and someone who once had great credit ends up needing a co-signer themselves next time they need a new line of credit!

    Thanks for stopping by again and sharing our articles!
    Shelly

  • Hi Britanica, Your friend was lucky! It was just $1200. When I was the credit manager at a credit union, I had to turn down a lot of people that wrote me letters about WHY their credit score was so low. As a credit union we would try to accommodate our members, BUT if you co-sign for someone you are saying you will also be responsible for the debt. I would look at a persons credit report and see they never miss a payment but they have a repossessed $30,000 car on their credit report because they co-signed for a friend or family member. I’ve even seen foreclosures on otherwise pristine credit.

    I have to tell them, never cosign unless you can comfortably make the payments when your friend of family member fails to do so!
    Thank you for becoming a member of our website community!

  • When I was younger, my friend’s mother cosigned for her friend. This friend needed a computer for school so she felt bad that her parents could not afford it. She swore to pay her back, but never did. She never even went to school. My friend’s mother’s score was hurt from it and she had to pay off the $1,200 debt she didn’t even know she had till a year later. I agree, never cosign a loan for anyone. No matter how big or small.

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