Credit card companies issue cards only to people with established good credit histories. If you don't have a strong credit history, you can still get a credit card by having a guarantor, or "cosigner," agree to be responsible for the balance should you fail to pay your bills on time.
Background
Getting a credit card with a cosigner does build your credit history. This is because the credit card will be listed in your name, even though another person has agreed to guarantee the debt. The three consumer reporting bureaus -- TransUnion, Equifax and Experian -- use the FICO credit scoring formula, which takes into account all credit items listed in your name, including cards that you opened with a cosigner.
Use Your Card Wisely
Although using your cosigned card will build your credit history, you must use it responsibly to establish a good credit score. The FICO formula takes into account "amounts owed," which is your credit card's balance in comparison to its limit. Generally, to raise your credit score, you should owe less than 30 percent of your card's limit in debt, according to Bankrate.
Avoid Missed Payments
Payment history is the largest component of your credit score, accounting for 35 percent of your rating as of March 2011, according to Fair Isaac, the developer of the FICO credit scoring formula. Missing even one payment on your cosigned credit card will leave a black mark on your credit report and send your FICO score spiraling down. In addition, your card issuer may cancel your credit card and pursue collection action against you and your cosigner for missing several payments, which will further affect your credit score.
Considerations
Because your guarantor cosigned your card, her credit is also affected by your responsibility or mistakes. If you use your cosigned card wisely, your and your guarantor's credit scores will increase. However, if you miss payments, run up a high balance or default on your card, both your and your cosigner's FICO ratings will plunge. In addition, if you fail to pay, your cosigner is legally liable for the debt and the card issuer may sue you both in court to collect the money.
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