The Credit Dangers to Your Credit Rating if You’re An Authorized User
You see it all the time. Your spouse, family or friend authorizes you to be on their credit card. The day arrives and you have a credit card with your name on it, but your credit rating is in the hands of the primary cardholder.
What happens if the primary user defaults on the card payment, either intentionally, or unintentionally? What happens is it goes against your credit rating as well. People die, lose their jobs, or get buried in debt they can’t recover from. But since you were named on the account, you will suffer too.
If you suspect that the principle cardholder may default on a debt, is irresponsible when it comes to paying on time, has severe health or even legal issues, or may be on the brink of bankruptcy, the first thing you want to do is get your name off the account as an authorized user.
Any late payments or defaults on their credit report, will also show up on your credit report as well. Furthermore, a bankruptcy on the primary cardholder could show up as a bankruptcy on your credit report too.
If you find yourself in any one of these unpleasant positions, there are certain things that you need to do.
If the debt isn’t too great a burden to bear, you might be better off just paying it, as long as you get your name off the account first.
If the debt is so large that you can’t pay it, you might want to consider a different tactic.
If a creditor calls demanding the debt be paid, never agree to pay it. In fact, send a registered letter with a return reply receipt disputing the debt. The logic being that, even if you pay the debt, your credit report has already been marred.
You need to find out for sure that you are just an authorized user on the card and not a joint cardholder, in which case you would be 100% liable for the entire debt. If you’re just an authorized user, you can send them a “Cease and Desist” letter not to call or harasses you.
You have rights that you need to be aware of, and you can educate yourself on the subject by going straight to the source. It’s called “The Fair Credit Reporting Act” and you can find it here: http://www.ftc.gov/os/statutes/031224fcra.pdf