What are joint credit cards?
A joint credit card allows two account owners to use the same credit account, enjoying the same rights to spend and update the account details, while sharing equal responsibility for repayment. Joint credit cards are not always available through banks or credit card companies, so be sure to do research on the joint credit cards available to you if you are interested in applying for one.
When you apply for a joint credit card, the card issuer will review the credit histories of all applicants to earn approval. This means that approval for the credit card will depend on the credit score of all potential account owners: so if one applicant has a low credit score, another applicant's good credit score may not be enough to earn approval.
In some cases, however, an applicant with a lower credit score may be able to qualify for better credit card terms through a joint application, based on the higher credit score of her/his partner.
If all applicants are approved for a joint credit card, the usage of the credit card can be repaid by any of the account owners and the legal liability for repaying the account falls on all joint account owners (each account owner is 100% responsible for the entire debt). This shared responsibility means that a strong partner relationship is a must for joint credit cards.
The joint credit card's payment history will be reported to credit bureaus and that history will appear in each owners' credit report: meaning that both joint account users will have their individual credit scores affected by the use of their joint credit card.
Joint account users that pay monthly bills on-time and keep their credit utilization ratio low will most likely find that they can both build good credit scores, while joint account users that miss payments or use most of their available credit could see dips in both of their credit scores.
Regardless of which joint credit card owner spent money on the card or made any payments against the debt, both joint owners will see their credit score affected by the usage of the shared card.
Joint credit card vs. authorized user
Sharing a joint credit card is different from adding an authorized user to an existing account: an authorized user's credit score is not evaluated for credit card approval, an authorized user is not legally responsible for repayment of the debt and an authorized user will not be granted any of the administrative functions of the account owner. Like joint account owners, authorized users can spend and make payments towards the account and most credit cards will report the card's payment history to the authorized user's credit report.
Building your credit with a joint credit card
All joint credit card account owners will see the payment history, credit usage, and age of the joint account factor into each of their personal credit histories and contribute to their individual credit scores:
- Each on-time payment to the joint credit card could add a positive record to each account owner's credit payment history.
- Keeping the debt of the joint credit card low when compared to the credit card's limit will reduce the credit utilization ratio, a factor that influences your credit score.
- Finally, keeping a joint credit card active and open could increase the average age of your credit accounts, which could positively impact your credit score.
Given that those credit score factors may account to a significant amount of your credit score (check your credit reporting agency for information on the most current reporting model) keeping your joint credit card account in good status can help you improve your credit score with each month of positive payments.
On the flip side, any missed payments or overuse of your credit limit can push down your credit score in the same way.
With that in mind, it is important that you maintain a trusted and transparent relationship with your joint card holder, ensuring that you build a plan for both spending on the card and repaying the card on time. By establishing and meeting expectations, you can help each other build good credit scores.
Do both users share a credit score on a joint credit card?
Credit scores are always based on an individual's credit history, so even joint card holders will have different credit scores based on the credit accounts that they don't share. While the payment history for a joint credit card will separately be reported to both joint account owners' credit reports, there are no credit agencies that provide a joint credit card credit score.
Joint credit cards help you build credit together
If you and a trusted family member or friend are comfortable sharing details of your credit card spending and promise to share responsibility for paying your debt, a joint credit card can help you both build good credit.
Applying for a joint credit card - when your partner has a higher credit score than you - can open up opportunities for better interest rates, higher credit limits, and more attractive rewards programs than your credit score can qualify for on its own.
By understanding how a joint credit card can help you to build credit, knowing how you and your partner will share your credit card expenses, and how joint credit cards can unlock attractive terms and rewards, you can approach a joint credit card application with the confidence that your credit score could grow with you.