Should I apply for a credit card with a cosigner?

Even though applying for a credit card with a cosigner can increase your likelihood of getting approved, many financial institutions in Canada don’t accept cosigned credit card applications. Instead, this option may be available on a case-by-case basis if you meet certain conditions. Or, banks might allow you to submit a joint credit card application, which isn’t the same thing.

Even if your bank allows cosigners, it’s still a big responsibility that you might not want to take on. If you don’t pay your balance on time, your cosigner will be liable. What’s worse, failing to meet your obligations can hurt both your credit scores.

If getting a cosigner isn’t an option, you have alternatives like getting a secured credit card or taking time to build up your credit before applying. Let’s walk through your options.

What is a credit card cosigner?

A credit card cosigner is a person who guarantees they will pay the credit card debt if the primary cardholder fails to do so.

Cosigner vs. authorized user

The main difference between a cosigner and an authorized user is who pays the credit card debt if the primary cardholder defaults. Other differences include:

Cosigner	Authorized user
Liable for the credit card debt	Not liable for the credit card debt
Doesn’t get a physical card	Gets a physical card
Doesn’t have credit card account access	Has credit card account access

Credit card issuers that allow cosigners

Most large credit card issuers don’t allow cosigners. Luckily, some do. Some financial institutions like Scotiabank allow cosigners to be added on to any credit card application, but the necessity of doing so is determined at the branch level by whichever bank representative is working with you on your application.

Other institutions like RBC allow any credit card to be jointly held if 2 people apply for a card together. This isn’t quite the same as cosigning a card application, given that both people would have regular access to the card. But it does allow 2 incomes and credit profiles to be considered when an application is being evaluated for approval.

Check with your bank or other financial institution to see what options are available for you.

Should I apply for a credit card with a cosigner?

Applying for a credit card with a cosigner makes sense if you:

• Have little or no credit history. This way, the cosigner guarantees the credit card debt will be paid.
• Have a poor credit score. This lifts the weight from the primary cardholder, but if you’re a cosigner, make sure you know what you’re getting into – especially if the primary cardholder is recovering from bankruptcy.
• Low income. Having low income can sometimes be enough for the card provider to decline your credit card application. Alternatively, having your back covered by a cosigner could get you the card you want.
• Are self-employed. If you don’t have an employer, lenders may need extra proof that you have a steady income and can afford to make repayments. A cosigner can help reduce the risk level of your application and possibly increase your odds of approval.
• Are under 21 years old. If you’re young, you most likely have limited income and little or no credit history. Lenders may require a cosigner to back your application before agreeing to give you a card.

But before you decide to apply with a cosigner, consider the benefits and drawbacks.

Alternatives

If you’re unable to find someone to cosign your credit card application, consider an alternative option like a secured credit card. These require some form of deposit or backing to guarantee the amount on the card. Deposits often start around $200 but can reach as high as $10,000. The benefit of this is that you can get approved for a card pretty easily (sometimes, without a credit check) and then build up a solid credit history until you’re able to apply for an unsecured card.

Perhaps the most obvious, albeit tedious, way of avoiding using a cosigner is by improving your credit score so that you can apply without one. A number of factors play into your credit score including the following:

If you focus on increasing your income, repaying your existing debt, avoiding using more credit and making payments on time and in full, your credit score will improve over time. Then, if you meet minimum income requirements to apply for a given card and have a good credit history, you may be able to apply for a card solo.

Speak with a financial adviser and review the options below to find the right card for you.

Related: Compare secured credit cards

Bottom line

If you can’t apply for a credit card because of poor or no credit score, applying for a credit card with a cosigner could be one option.

However, a better alternative to build your credit is to become an authorized user to someone else’s credit card account or to apply for a secured card and build your credit yourself.

Frequently asked questions

• When do I ask the card provider to remove the cosigner?

  This is the first thing you should do as soon as you’ve improved your credit.

• Is the cosigner's credit score affected by the primary cardholder's activity?

  Yes, if the primary cardholder uses the card responsibly, both they and the cosigner will get a positive boost to their credit score. However, the opposite is also true if the primary cardholder defaults on their debt — it will affect the cosigner’s credit score as well.

  Additionally, the credit line will show up on both the primary cardholder and cosigner’s credit profiles, impacting their debt-to-income ratios and credit scores respectively.