Co-Signing Credit for Your Kids

Questions to ask yourself before co-signing for a credit card

The way credit works have always been kind of confusing — especially for young people. They need credit to get credit, but they can’t get credit without credit. That conundrum often leads to parents co-signing for credit cards. It’s a simple way for young people to start that credit journey. However, before you co-sign for a card, you should ask yourself a few questions.
How Will It Be Used?

When deciding if you should co-sign for a credit card, first figure out how it will be used. If your kid wants to use it for a few small purchases over time — which will help build credit — then you might opt to co-sign. However, if your kid wants to use the card for expensive items, you might want to reconsider. That’s because you’re on the hook for everything that happens with that credit card. If your kid runs up a big bill and can’t pay it off, the missed payments could end up hurting your credit score.

Is Your Kid Responsible?

Your credit and your child’s credit are on the line when you co-sign for their credit card. So the next question you have to ask yourself is do you trust your kid to handle this? Having credit is a big responsibility, so try to be honest about this answer.

What If Things Go Wrong?

As USA Today notes, before co-signing for a kid’s credit card, you should go through the worst-case scenario. If they fail to pay the bill or use too much of the available credit, their credit score will take a hit. Can your score handle it? If you’re in a good place financially and credit-wise, then it could be the right move to co-sign.

Chris O'Shea

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