We all know that cosigning a credit card application can be a risky venture – one that doesn’t have a great return on it, either. If the borrower runs up the credit card and then doesn’t pay on time, it not only affects their credit, but ours as well. In addition, we can be held legally responsible for repaying the debt when it comes right down to it.

But, when a family member comes to us and asks for help it can be very hard to say no.

Here are some things that you need to consider before you agree to cosign the application. If they can’t provide an answer to these questions that make sense, then it’s probably a good indication of how responsible they won’t be with the credit card.

  • How will they repay the card? Are they working? These questions typically apply to the college student that’s asking for a cosigner. Sometimes they work, but only over the summer, and sometimes not at all so they can focus strictly on their studies. But, signing your name to their credit card application should be considered very carefully, especially if they’re not working. If there’s no income and you’re paying the bills, then you have to consider that you’ll be paying the bill, whatever it is. If it’s a family member just requesting help, the questions still apply. You certainly don’t want to add their bills to your own, so make sure they can truly afford to make any payments they incur before you agree to help them.
  • Has the individual handled credit before? Find out whether the person you’re considering cosigning for has ever handled credit before – be it through a credit card or through a loan. Look to see how they handled their past credit. If they’ve handled past credit poorly, how long ago was the infraction? In this instance, you have to think like a lender and determine what kind of risk this person presents to you and your credit. If the credit blunder was recent and they seem a bit risky, I’d recommend not cosigning for them until they improve their habits…family or not.
  • Why do they want the credit card? The reason for wanting the credit card could be a major indicator of how the person intends to use the card. There are lots of reasons people want credit cards, but only a handful of good reasons. Make sure you probe them carefully to get to the real reason for wanting one. A trip to Rome over spring break to hang out with their friends is not a good reason for a credit card and something you should not put your name on. If they want it just for emergency purposes, but you’re still not sure, I’d recommend saying no and helping them set up a savings account to put money aside for emergencies. To be honest, I’d probably recommend this option for just about any reason that someone wanted me to cosign for them, but that’s just me.
  • What’s their driving record like? A bit of a weird question, I know. But here’s the thing, if the person requesting your help has racked up a ton of traffic tickets, been cited for reckless driving or other irresponsible behaviors behind the wheel, or been in multiple accidents, it could be an indicator of how they will handle the credit card. Such reckless behavior generally translates to other facets of their life, including their finances, so it may be a good idea to forego becoming a cosigner for someone like this.

These questions are a great starting point to determine the risk factor involved with cosigning a credit card application. When someone comes to you and asks for your help, they are giving you the right to pry into some of these personal matters, and you should do so because it is your credit on the line. If they balk at the idea of answering your questions, then tell them to seek help somewhere else. It’s not a matter of being mean or spiteful, it’s simply a matter of taking care of your credit and finances.

Have you ever considered cosigning for someone? How did that go? Did you ask any questions, or did you just go along with the process?