Q. I co-signed a credit card for my son when he started college. Iโd like to get off of that account now. What should I do, and will it hurt his credit report? โ Dad
A. Many parents who co-sign a credit card for their child do so in an effort to help the child build good credit.
But itโs common for the parent to later worry about their own credit score.
Thatโs one of the pitfalls of co-signing, said Jeff Rossi, a certified financial planner with Peak Wealth Advisors in Holmdel, New Jersey.
โAs a co-signer, you accepted full and equal responsibility for the debt under contract,โ Rossi said. โThe account will appear on your credit history along with any late payments.โ
He said you, in a sense, have put your good credit history in your sonโs hands.
Given that youโre still concerned about your sonโs credit scores, Rossi said, it sounds like everything has gone fine so far, and the move probably helped his credit score.
Itโs not always easy to just get removed from a co-signed credit card, Rossi said.
Thatโs because the credit card provider may have required a co-signer for your son because he did not qualify for the credit card alone.
โBy co-signing, you agreed to make the credit card payments if he did not,โ Rossi said. โThe bank may still see that situation the same way, and in order to get you off of the account, you may need to shut down the account.โ
If there isnโt a balance, some credit card issuers are willing to remove your name, provided the remaining account owner has decent credit, Rossi said.
He recommends you call the card issuer โ or have your son call โ and ask if this is an option. If they oblige, thatโs the best option for your sonโs credit, because a longer positive history is beneficial to credit scores.
Credit scores are generally based on five different factors:
- Payment history
- Accounts owed
- Length of history
- Credit mix
- New credit
โIf you wind up having to close the account and have your son re-establish a new account, it will definitely impact the length of history category, but the silver lining is the weighting is not as high as the first two items,โ Rossi said.
[Editorโs note: You can see how changes in your accounts โ like closing a a credit card โ affect your credit by getting two free credit scores, updated every 14 days, on Credit.com.]
More on Credit Cards:
- Credit.comโs Expert Credit Card Shopping Tips
- An Expert Guide to Credit Cards With Rewards
- How Secured Cards Can Help Build Credit
Image: digitalskillet
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