How to Add Someone as a Cosigner to Improve Credit

The Federal Trade Commission reports that companies that promise to repair credit are often a scam. In fact, they say that a legitimate credit repair organization would never advertise the ability to erase all your bad debt or to provide you with a new identity. However, if you wish, you can help a close friend or relative raise their credit score by allowing them to piggyback on your strong credit rating.

Instructions

1

Make them joint credit card holder. Choose your credit card with the lowest limit and contact your credit card carrier in order to add someone new to your account. Every payment made toward this account will be reported to the three major credit bureaus. As long as the card is paid in a timely manner, it will benefit both of your credit reports. However, if the other person does not hold up their end of the bargain, you will be stuck with paying the entire amount in order to keep your credit in good repair.

2

Cosign on a department store card. Your good credit will give the creditor a sense of assurance that the debt is going to be faithfully paid. As a cosigner, you have the right to check the account each month to ensure it has been paid. It's especially important to check regularly because as the cosigner, your credit is at risk if the other party is not paying on time.

3

Cosign on a small, personal loan. If the person you are helping has fair credit, they may be able to get a small personal loan from their bank with your cosignature. Like other loans, it will be reported to the three major credit bureaus, helping to improve an overall credit score. Make sure the loan is small enough that you can easily pay it off if the other party reneges. The best bet with a small personal loan is to have the other person pay it back in full within weeks of receiving it. It will show up on their credit report as an obligation paid in full.

4

Pull the plug on the exercise if the person you're helping is not doing their part. This is your credit reputation at stake. The first time they miss a scheduled payment, pay the balance off. If you hold a credit card jointly with this person, cancel the account. Canceling a credit card will mar your credit, but is much easier to recover from than late payments. Go to the person you have been helping and ask for repayment. If this person refuses to pay, you may have to take them to small claims court.