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Credit > Authorized Users |
Why You Shouldn't Be An Authorized User on a Credit Card Are you an authorized user on someone else's credit card account? If you answered yes then your credit rating is in jeopardy. You are advised to get your name removed as an authorized user from all credit card accounts as soon as possible. What most people don't realize is that being listed as an authorized user on someone else's credit card account results in that person's payment history being reported to the authorized user's credit report as well. This is a good thing if you have no credit, because you can actually build up your credit if the main accountholder has good credit and pays her bills on time. But what happens if the principle accountholder habitually pays late? What happens if the account is charged-off or the accountholder files bankruptcy? That information is reported to the authorized user's credit report as well. It will damage the authorized user's credit rating just as severely as it will damage the main accountholder's credit rating. Of course, you are thinking to yourself, "How can this be? An authorized user is not legally obligated to pay the debt, even if he was the sole user of the credit card! And how is it that I can be discriminated against because someone else files bankruptcy?" These are very good questions. Any attorney will tell you that an authorized user never signed a contract with the credit card company and cannot be legally held responsible for the debt. Nevertheless, credit bureaus continue reporting the payment history of the principle accountholder on the credit reports of authorized users. There isn't a federal or state law that prohibits them from doing this, but a few lawsuits have been filed by people who have been damaged by this practice. Authorized User True Stories 1. A divorced man can not get a mortgage loan because he is listed as an authorized user on his ex-wife's credit card. She filed bankruptcy and it was reported on his credit report that the account was written off, and now he is suffering the consequences. 2. An elderly woman lists all six of her adult children as authorized users on her credit cards. She thought this was a good thing to do so that they could charge on her cards if she became incapacitated. When she died her assets were tied up for months while the estate was being settled. In the meantime, her credit card bills went unpaid. Late payment notations began appearing on all of her children's credit reports, destroying their credit ratings. One child was so damaged financially that he became severely depressed and suicidal. All of her children had to spend a significant amount of time and expense trying to restore their credit ratings by getting their mother's credit card accounts removed from their credit reports. The Credit Bureaus' Policies The credit bureaus claim the practice of reporting the accountholder's activities on the authorized users credit report is justified, but they don't state why it is justified. Could it be that they have adopted this policy on behalf of the hundreds of credit card companies who subscribe to their services? Perhaps this is the real reason why since every day authorized users are effectively blackmailed in to paying credit card debt they are not legally obligated to pay by the credit card companies simply because the main accountholder won't pay. What many authorized users falsely believe (or are told) is that, if they pay the delinquent debt of the principle accountholder, they can restore their credit ratings. But this isn't true. One of the most common myths about credit repair is that paying off delinquencies will result in them being removed from one's credit report. Even if you paid the account in full, the delinquent notations remain on your credit report unless you succeed in getting them removed or seven years have passed. How to protect your credit rating Check your credit report to make sure you aren't the authorized user on someone else's account. If you are an authorized user, an "A" notation will appear on your credit report in the left hand column. Your parent might have listed you as such when you were a teenager or college student because they thought it was the right thing to do. Your elderly parent might have listed you as an authorized user even though you are middle-aged. You might be listed as an authorized user on the account of someone you live with or are married to. If so, ask the person to call the credit card company and have your name removed as an authorized user so the account will no longer be reported on your credit report. (A few of the top ten credit card banks allow you to remove authorized users from cards with just a few clicks at their web sites.) Also, ask your relatives not to list you as an authorized user in the future and explain to them why they should stop doing this. If you are going through a divorce, insist that your ex-spouse remove you as an authorized user from any credit cards as part of the settlement agreement. You do not have to be officially listed as an authorized user to use someone else's credit card. Very few businesses will question your authority to use the card or verify your identity by asking for a picture I.D. If your credit report is already damaged If you have a damaged credit rating because your authorized user status allowed negative information to be reported to your credit report, don't pay off the debt. You shouldn't pay it because you aren't obligated to pay it, even if you made purchases on the card, and paying it isn't going to improve your credit score one point. Instead, fight back and get that account erased completely from your credit report on the grounds that it is unfairly damaging your credit rating and in violation of the Fair Credit Reporting Act. You could also contact the creditor in question and ask them to remove it, but you will need the personal information of the principle accountholder to do this. [Our credit kit also includes information about getting such accounts removed from one's credit report.] Collection Efforts and the Authorized User If a creditor or debt collector is pressuring you to pay a debt on a credit card when you were nothing but the authorized user, we recommend that you take the following steps. 1. Do not agree to pay the debt or send in any partial payment on the debt no matter what they threaten to do. And remember, paying the debt will not improve or restore your credit rating. 2. Find out if you are indeed nothing more than an authorized user. In other words, make sure you are not really a joint accountholder, which would make you liable for 100% of the debt. You can do this by pulling your credit report. On the credit report you will find a single letter notation that designates you as a J - Joint accountholder or A - authorized user on the account in question. 3. If you are nothing more than an authorized user, send the creditor or collector a certified mail, return receipt requested letter denying liability for the debt on the grounds that you are only the authorized user and are not legally responsible for the debt. You can send along a copy of that portion of your credit report showing you as nothing more than the authorized user if you like. Your letter should also tell them to leave you alone, to stop calling you and that you will be reporting their attempt to collect a debt from you when you are not legally responsible for it to the Federal Trade Commission and the Attorney General's office of your state. If you know in what state the creditor or debt collector's company is based, you can also file a complaint with the Attorney General in that state for their deceptive trade practices. It is important that you take the time to write the certified letter above because you want written proof that you dispute the debt and that the other party received notification that you dispute the debt. Legally, a creditor or collector is not supposed to add a collection account regarding the matter to your credit report if you dispute its validity within a timely manner. Write this letter as soon as possible. Our credit and debt kits include 50 sample letters to effectively deal with collectors and improve your credit rating. |
Credit > Authorized Users |
Debt Kit -- Settle unsecured debts for less than half of amount owed Credit Kit -- Improve your credit rating and reduce monthly payments by $200+ |
