Dear Creditnet: My college-age son had good credit, but then he got sick and was unable to work for a long time. He got behind on all of his obligations, so my husband and I are attempting to help get him back on track and rebuild his credit. We would like him to have a credit card in his name that we will be responsible for paying, but we're not sure what kind of card he could get approved for with bad credit. We would rather not co-sign unless it's absolutely necessary. What do you suggest? - Mary B. from CT
Answer: If your son is over 18, he can apply for a credit card in his own name, but he may still need a co-signer if he has no income of his own at this point in time. New regulations that were part of the CARD Act of 2009 have made it much more difficult for young adults to get approved for credit cards in their own names, which is why it's great that you're actually willing to help him out if necessary.
Many parents aren't willing to do the same. If his FICO scores really are in the "bad credit" range, which is basically anything below 600, I would suggest having him start the credit-rebuilding process with a secured credit card. He can apply in his own name, he will be responsible for making timely payments, and hopefully he won't have a problem getting approved for a secured card without you cosigning. However, keep in mind that he will need to make an initial deposit that will be held as collateral by the credit issuer.
The Capital One Secured MasterCard, for example, requires cardholders to make an initial deposit of $49, $99, or $200 based on a review of their credit scores and application information. If he doesn't have the cash on hand for the deposit, you can certainly step in to help him out on this piece without worrying about co-signing or taking on any liability for the account. Then, after 6-12 months of keeping his credit utilization low and making monthly payments on time, his FICO scores should hopefully rise out of the bad credit range and he can begin looking into getting approved for a student credit card with better rewards and no annual fee.
