Money Matters - Shared Credit

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Wednesday, June 13, 2012

Parents of young adults may have been faced with their children asking for loan help. Young adults may not have the credit history needed to qualify for student loans, car loans or a mortgage.

But some experts advise parents to know a few secrets before signing the loan application. There is more than one type of shared credit.

1. Joint Credit You are a full partner on the account. But you are responsible for 100-percent of the bill if the other person walks away.

2. Authorized User You can use the credit, but you have little or no responsibility for repaying it. If the other person walks, the lender may still try to collect from you.

3. Co-Signer You are signing to be responsible for the entire bill, but the loan or credit account is in someone else’s name and you can’t use the credit.

Parents co-signing for someone less than 21-years-old may be liable on the account after the child turns 21. Experts say parents should make a child an authorized user on a primary account.

Remember, unpaid debt shows up on your credit report.


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