Managing a joint credit account

Joint credit accounts are great for people looking to make bill payment simple or help each other get good credit scores. You can do it with your children, your spouse, your friends, co-workers and other family members.  This is a great way to help build a credit report for people who do not have any credit history.

The co-signer and authorized user, what is the difference?

There are two ways to share your credit account; you can wither add the second person and make them a joint account holder or add them as an authorized user.  The authorized users do not have any legal responsibilities to make any payments on the loan or the credit.  They are however, allowed to make any type of purchases on the account.

For a joint account holder, they are legally and equally liable for the loan and credit card payments. Both of these options have major benefits but you have to be careful when it comes to choosing the right method for a joint account.

The situation you are in will determine the type of joint account you want to create. For parents who want to help their children build a credit history can create an authorised credit report.  Many banks send activity reports of the authorised person to the credit bureaus, this mean that they can build a history off your credit.

It is also a great idea for spouses who want to lift their partner’s credit. An authorised account can help you lift a low credit rating using your partner’s high credit rating.  Keep in mind that not all credit card lenders will report the activities to the bureaus, which is why you should conform this before you add anyone to your accounts.

Joint accounts are great for people who share equal financial responsibilities. Your credit card issues may not allow you to add someone to your account if the account is pre-existing. This means that you need to open a new joint account together.

 To get a joint account, both of you will need to give some personal information to the issuer who runs a credit check on you both. They also consider the credit backgrounds before they decide whether or not to approve the application, the terms, limits and interest rates for your credit cards.  Even with a good credit score, you should expect a high interest rates and low credit limit if the cos0-signer has a very poor credit history.

What happens if you spilt?

If you decide to break off the joint account with your partner,, both of you will be responsible when it come to completing the bill on the card. Nothing, not even your divorce, will change the original terms on the contract. Basically, the credit card issuer will want to you complete all the payments even when the contract is broken. This is why some lenders do not close the account when your balances are not completed. Some partners may refuse to make the payments and this will affect your credit score majorly.