What's a college student to do when he's not old enough to buy a six pack of his favorite brew? He simply asks his older frat brother to buy it for him, of course. And now that the CARD Act restricts anyone under 21 from acquiring a credit card without an adult cosigner or proof of ability to pay, students are using the same old tactic in order to skirt the intent of the law.
Why not get that same frat brother who buys the beer to cosign your application? Your parents' credit may already be in the tank anyway, so they're not going to help you out at all. And if you're lucky, this guy might not even charge you anything. It's perfectly legal, and it doesn't hurt anybody, so what's the big deal?
Well, the big deal is it's really risky business for co-signers, who often have no clue they're putting themselves on the hook as joint-account holders and personal guarantors. If either cardholder messes up and misuses the credit card, the other would be legally liable for the debt, and credit scores could get trashed overnight. So let's get this straight.
Unless you're married and helping your spouse build credit, or a parent with an enormous amount of faith in your child and the means to potentially bail them out of a hole, you should NEVER cosign another person's credit card application. Even if you get offered money to do it, it's not worth it. Walk away. Go donate plasma or something instead. At least that's what we did for extra cash when I was a student.
Frankly, I've never agreed with the whole argument that no one under the age of 21 is responsible enough to handle a credit card on their own. In my opinion, this has always been a discriminatory rule, and it was only a matter of time before it created even worse problems such as this. Who knows, the next thing we may have to deal with is entrepreneurial-minded students actually starting businesses that connect buyers and sellers of co-signatures on campus.
Crazy college kids!
