Millions of Americans negatively impacted by job losses and battered credit ratings are looking for "easy" ways to rebuild their credit worthiness. One of the most recommended ways to rebuild credit worthiness is for a debtor to have a trusted (and credit worthy) family member or friend add them to their credit card. Credit "gurus" often suggest this method because by adding the debtor to someone's credit card who has good credit the credit standing of the troubled debtor improves because of the good standing of the friend or family member. However, while in a perfect world this may work, there are some inherent risks for the debtor adding their name to the credit card of a friend or family member, even if that person has perfect credit.
- Any transactions on the credit card are the responsibility of both people whose name is on the credit card. What this means is that if that even if a trusted friend or family member charges up thousands of dollars worth of transactions on the credit card both parties are responsible for paying it back. The credit card company will not make a distinction between who charged what.
- If the primary credit card account holder defaults, the credit card company will come after the other person on the credit card account. For example, if your trustworthy friend or family member losses their job and is unable to repay the credit card, you will then become liable for the entire credit card balance. The credit card company will have a legal right to pursue payment from the secondary cardholder.
Before a debtor decides to add their name to someone else's credit card, they need to make sure that they are willing to pay that person's credit card debt in the case that something goes wrong and that person is unable to repay their debt.