Before February 22, 2010, very few restrictions stopped a person from getting credit cards. Most adults with decent credit and some form of income could receive approval without much effort. It wasn’t surprising to see consumers with three or more cards. Signed into law nine months prior, the Credit CARD Act of 2009 changed the system from February 22 onward. Like other landmark legislation, the act imposed numerous changes on the credit card industry.
Major Effects of the Credit CARD Act of 2009
The average consumer, however, wouldn’t notice every single change. Individuals that already owned credit cards wouldn’t lose them. Unfortunately, newcomers applying for credit would find it much more difficult to receive approval. American consumers under 21 years-old would face the biggest impact of this legislation. Strict income requirements are now required for approval. Likewise, a person under 21 needs a fairly strong credit history in order to receive a line of credit.
Stringent Approval Requirements; Not Everyone Makes the Cut
Not all consumers can get a credit card on their own merits today, regardless of age. Currently, anyone that doesn’t meet a creditors income or credit requirements will be denied. Skirting these requirements is nearly impossible, and applicants can’t exactly lie about their income. With that in mind, perhaps a person’s only solution involves applying for credit with a cosigner. Cosigners are commonly used with personal loans, too.
The Cosigner & Its Benefits for Credit Applicants
Adding a cosigner to a credit card application comes with various benefits. When an application is processed, the applicant and cosigner’s credit worthiness are assessed together. This improves a person’s chances of receiving approval for credit. Even a person with poor credit can get approval thanks to a strong cosigner. Without a doubt, cosigning for someone’s credit application comes with some risks. Not everyone makes a great cosigner either.
What Makes a Person Worthy of Cosigning?
Various characteristics make a given person a good cosigner candidate. For instance, creditors look favorable upon individuals with a clean credit history. A high credit score looks even better to creditors. Likewise, a potential cosigner should have a high asset to debt ratio along with a high but steady income. No credit applicant should simply throw a random cosigner onto their application. Quantity doesn’t beat quality in this situation.
Cosigners: Not Always An Option
These days, creditors don’t always offer applications with cosigners. Only a handful of banks and financial institutions permit cosigners. The thought process here is that applicants should be judged based on their credit worthiness alone. Plus, creating a system with an account owner and a cosigner isn’t exactly simple. Bank of America, Wells Fargo, and other banks allow for cosigners. Chase is one example of a creditor that doesn’t, though.
Adding a Cosigner onto a Credit Application
Some credit applications offer a section for a cosigner’s information. Applicants can choose whether or not they want one. If a given application doesn’t come with this feature, then a person should contact the creditor. In some cases, a creditor requires advanced notice and a special cosigner application. Others only permit authorized users in which the potential cosigner would actually become the account owner. Each financial institution handles this situation differently.
A handful of creditors won’t offer a cosigner until a person’s application is denied. Typically, the credit card company will contact a person by phone or mail. The cosigner will then be required to fax or mail a written application. Companies that choose this path normally don’t mention cosigners until a denial. A solution usually isn’t available before that denial occurs, though.
It never hurts to ask creditors about cosigners. In the end, various options are available through credit unions and banks today. An individual that doesn’t have strong enough credit on their own will need a cosigner. Applying with one of these individuals couldn’t be any easier. For the best results, a cosigner should have a high asset-to-debt ratio and strong credit history. Only then can a person consider their chances of approval high.