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How To Get Credit When You Don't Have Any Or Your Credit History Is Bad

Co-Signers and Guarantors

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A co-signer is a person who co-signs an application for a credit card. From the credit card company's point of view, it is as if the two of you will use the account in a manner that benefits both of you. You are both liable for the entire debt (including interest and usually costs of collection.)

  • If you're late on or miss a payment, the credit card company can include both names when reporting to the credit bureaus. Thus, a late payment could effect the credit rating of your co-signer.

With a guarantor, the credit card is solely in your name. The guarantor only comes into the picture if you default on your payment obligation. In that case, the guarantor has to make good on the money -- including principal and interest.

  • If you're late on or miss a payment, the credit card company will usually only report the situation to your account with the credit bureaus. There is generally no effect on the credit or your guarantor unless the loan is called, and the guarantor doesn't paid as agreed.

If you're going to approach friends or relatives about being a co-signer or guarantor, read: How To Approach Friends And Relatives.


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