Is Applying For Joint Credit A Good Idea?
Whether two individuals are getting married, co-signing on a mortgage or allowing a child to become an authorized user on a credit card account, Investopedia explains that individuals apply for joint credit for a variety of reasons. Simply put, this allows people to share responsibility for repaying a debt, and applying for joint credit allows one individual to obtain something that they couldn’t qualify for on their own. This is because “joint credit” is based upon combined income, assets and credit histories of those that apply. Yet, because combining financial interests will affect all parties’ credit scores, those applying for joint credit should proceed with caution.
To better understand the types of joint credit, take a look at the following:
- Co-Borrowing
- In this case, a person is added to an existing account. Therefore, he or she shares charging privileges. However, the co-borrower is 100% responsible for paying the bill.
- Co-Signing
- Similar to co-borrowing, a co-signer is “signing” to be responsible for 100% of the bill for an account. Yet, he or she does not have access to the loan or line of credit for usage. Furthermore, if the primary signer misses a payment or defaults on the loan, the co-signer’s credit history is at risk.
- Addition of an Authorized User
- When a person is added to an account as an authorized user, he or she is able to use whatever credit is available on the account, without the financial responsibility to pay it. Given this case, a new authorized user can improve and build credit if payments are consistent and on time. In the same way, however, an authorized user can ruin another’s credit if he or she accrues a substantial amount of debt.
- For the most part, joint credit becomes a problem in the event of a divorce, or when an authorized user’s activity is not regularly monitored. In both instances, the credit history of one person can affect the other. What’s more, it is often difficult to close a joint credit card account, particularly when a balance remains.
We’ll Help You Obtain The Debt Relief That You Need And Deserve
If you have found yourself in a crunch after filing for joint credit, and you are considering bankruptcy, Attorneys Ira D. Gingold and Jamie L. Gingold are well equipped to help you obtain the debt relief that you need and deserve. With offices throughout the Atlanta metro area, call Jamie L. Gingold, PC, GingoldBankruptcyLaw.com (Formerly practicing with Gingold & Gingold LLC) today.
