What Is a Credit Card Cosigner?

A credit card cosigner is a person who accepts responsibility for the credit card debts that another person generates should that other person fail to make the required payments. When a credit card cosigner attaches his or her name to another person's credit card, that person is effectively accepting responsibility for all the debts accrued on that card. If the actual cardholder fails to make payments, then it becomes the duty of the cosigner to fulfill those payments. The contract to which a cosigner agrees makes him or her just as responsible for the debts as the cardholder, and can subject him or her to the same penalties — including additional fees, legal action and credit report damage — should the payments not be made.

The purpose of using a credit card cosigner is to protect the issuing bank from losing money when it gives credit cards to people who have no credit or poor credit. This system can give a person who would not normally be able to have a credit card a chance to establish or improve his or her credit rating. People who are acquiring their first credit card frequently use a credit card cosigner so they can begin to build good credit and eventually be able to secure a loan or credit card without a cosigner.

When a bank is considering a credit card cosigner, it will apply the same rules as if the cosigner was applying for the card directly. The bank looks at income, credit history and current debts, determining ability to pay. If the cosigner qualifies, then that person is allowed to cosign, or guarantee, the credit card on behalf of the card holder. Should the cosigner not qualify, then the credit card will most likely not be issued.

It can be difficult finding a credit card cosigner because of the large amount of risk and responsibility that comes with the contract. The cosigner will need to have a large amount of trust in the cardholder and the resources available to cover any debts that are not paid, something necessary to preserve his or her own good credit rating. A family member or close personal friend is most often the best option for finding a cosigner, although anyone who qualifies can be a credit card cosigner. In some instances, such as on college campuses, this has led to a practice in which some students with good credit will charge a fee to become a cosigner for a student who does not yet have established credit.