"authorized user" on a credit card and holder does not pay it.

[rayvt]

What happens if you are an "authorized user" on a credit card and the person who has the card in their name stops making payments?

The credit rating agencies know that you are an authorized user, and have noted that on your credit report.

Does that have any effect on your credit rating? Are you in any way responsible for making payments?

 

[Sunset]

I would take my name off as authorized user.

 

[gayl]

OK!!!

Last October my grandson and I started a card together so he could build credit. For several months he paid the minimum payment as it was really his card. I never bought anything with the card. Then he moves to LA and stops making any payment. So missed payments start showing up negatively affecting my credit. As a result I closed it and paid off 2k, slowly rebuilding my credit. After several months I'm back to 805. so that's what happens when somebody (authorized user or co-owner) stops paying on a card. Fortunately I didn't add him to my card with 22k limit.

In retrospect what I should have done was get him a secured card in his name only.

 

[Aerides]

The behavior of all account holders impact the credit score of all account holders, unless the authorized user is under 18, or unless your card specifically says they do not report activity (good or bad) on authorized users.

Credit/collection agencies cannot come after you for these payments.

Contact the issuer and remove yourself, then monitor your credit reports. It's not hard to get it removed if you are the auth and have removed.

 

[donheff]

Interesting that it goes two ways. The lesson is clear. If you have good credit, don't have any deadbeat authorized users on your account. But, just as important, if you have good credit, do not become an authorized user on a card owned by someone with less stellar payment practices.

Only DW and I are authorized users on each others cards and the are all on auto pay so it has not been an issue for us.

 

[Sunset]

DW & I are not authorized users on each others cards. This allows us to each get a great deal card independently for the bonus.

Also we each have our own credit rating (great). This is something I recall from my mom, who explained to me how sometimes women just were users on their hubbies CC, and when he died, they had no CC's and it was hard to get one.

 

[foxcreek9]

OK!!!

Last October my grandson and I started a card together so he could build credit. For several months he paid the minimum payment as it was really his card. I never bought anything with the card. Then he moves to LA and stops making any payment. So missed payments start showing up negatively affecting my credit. As a result I closed it and paid off 2k, slowly rebuilding my credit. After several months I'm back to 805. so that's what happens when somebody (authorized user or co-owner) stops paying on a card. Fortunately I didn't add him to my card with 22k limit.

In retrospect what I should have done was get him a secured card in his name only.

Another option for those wanting to help is to add then as an authorized user but not give them the card, their credit score will be positively impacted and you don’t have to worry about them going rogue and costing you money.

 

[Texas Proud]

OK!!!

Last October my grandson and I started a card together so he could build credit. For several months he paid the minimum payment as it was really his card. I never bought anything with the card. Then he moves to LA and stops making any payment. So missed payments start showing up negatively affecting my credit. As a result I closed it and paid off 2k, slowly rebuilding my credit. After several months I'm back to 805. so that's what happens when somebody (authorized user or co-owner) stops paying on a card. Fortunately I didn't add him to my card with 22k limit.

In retrospect what I should have done was get him a secured card in his name only.

Interesting.... I am assuming that YOU got the card and put his name on it... that would make you responsible for the charges as you found out..


I do wonder if HE got the card and put you as an authorized user it would be the same...


Edit to add... Had to look it up....




A credit card authorized user is someone who is added to another person's credit card account. An authorized user receives a card of their own to make purchases, but they aren't liable for payments.




https://www.experian.com/blogs/ask-experian/what-is-credit-card-authorized-user/

 

[rodi]

Reading this thread makes me very glad that my sons opened cards on their own. (In order to build credit). They each had paid utility bills so they had a very small credit score prior. Both have had their limits raised and have seen their credit score go up as they've passed the 1 year mark of paying in full every month. (I have lectured them extensively on not carrying a balance, that good credit will reward you with lower mortgage rates, lower insurance rates, etc.)

I had considered adding them as authorized users but that would have involved unfreezing my credit... and I'm too lazy.

 

[MarieIG]

Reading this thread makes me very glad that my sons opened cards on their own. (In order to build credit). They each had paid utility bills so they had a very small credit score prior. Both have had their limits raised and have seen their credit score go up as they've passed the 1 year mark of paying in full every month. (I have lectured them extensively on not carrying a balance, that good credit will reward you with lower mortgage rates, lower insurance rates, etc.)

I had considered adding them as authorized users but that would have involved unfreezing my credit... and I'm too lazy.

I did not add any of my sons to my cards as an authorized users, I was able to get them money as necessary (i.e. during school and as brand new enlisted in the military), and all were able to establish credit.

 

[Texas Proud]

Reading this thread makes me very glad that my sons opened cards on their own. (In order to build credit). They each had paid utility bills so they had a very small credit score prior. Both have had their limits raised and have seen their credit score go up as they've passed the 1 year mark of paying in full every month. (I have lectured them extensively on not carrying a balance, that good credit will reward you with lower mortgage rates, lower insurance rates, etc.)

I had considered adding them as authorized users but that would have involved unfreezing my credit... and I'm too lazy.

Both DD and DS got their own CC when they went to college... DD just got an offer for another CC and signed up for it... her takeaway.... 'it is way too easy to get a CC'....

 

[rayvt]

Experian says: "An authorized user receives a card of their own to make purchases, but they aren't liable for payments."

and "Experian won't include the information on an authorized user's credit report if the primary account owner misses payments."

 

[Mulligan7]

I just dealt with this from a different perspective.

Without me realizing it, my last line of credit, a car lease, dropped off my credit report. Apparently, I haven’t had any lines of credit for over 10 years.

My credit score instantly dropped from 795 to 635 overnight. I was flagged as a risk due to no credit history.

I have two credit cards that I use for all of our expenses, but they are in my business name. Even though my name is printed on them, they are not reported under personal credit.

I applied for two personal credit cards. CitiBank denied my app and Chase gave me one with a $2,000 credit limit. Interestingly, I have over a million dollars in laddered cd’s with CitiBank but they don’t take that into consideration.

I ended up having our adult son add me as an authorized user on one of his credit cards and now I have 15 years of active credit. Within 30 days, my credit score went back up to 798.

It astonishes me that there is no human factor in computing a credit score.

One would think I accomplished the American dream. House paid off, cars paid off, etc. with a decent portfolio, but instead I’m a risk.

Rant over…

 

[OnTheBeach]

I set up a new credit card with my children (18,18) as authorized users - (1) for emergeny purposes (2) for them to build up a credit history and (3) purchases for the family (ie picking up takeout). I pay off the card monthly using autopay. They are very responsible and use their personal debit cards for gas and personal spending. They just graduated high school and have part time jobs but their income isn't enough to qualify for the credit card on their own.

 

[Badger]

Both DD and DS got their own CC when they went to college... DD just got an offer for another CC and signed up for it... her takeaway.... 'it is way too easy to get a CC'....

I am surprised that an 18 year old could get a CC on their own without any help and no steady income. I can see your DD getting another CC as a college graduate since they would be considered a safe bet.

Cheers!

 

[copyright1997reloaded]

I set up a new credit card with my children (18,18) as authorized users - (1) for emergeny purposes (2) for them to build up a credit history and (3) purchases for the family (ie picking up takeout). I pay off the card monthly using autopay. They are very responsible and use their personal debit cards for gas and personal spending. They just graduated high school and have part time jobs but their income isn't enough to qualify for the credit card on their own.

You might be suprised.

I added my son as an authorized user a couple years ago so that he would have an "emergency" credit card to use while away at school. [Side note: I had to explain (after it happened) that a midnight pizza run did not constitute an emergency when one has an unlimited meal plan. ] Anyway, fast forward to recently when after getting his first full time job and being there less than a month, he applied for a credit card....and found out his FICO score was in the 750 range (very good). All with no real previous work experience or history of making payments. But plenty of use of that credit card (I have him use it for various things for me) and of course MY penchant for never carrying any sort of balance.)

 

[Texas Proud]

I am surprised that an 18 year old could get a CC on their own without any help and no steady income. I can see your DD getting another CC as a college graduate since they would be considered a safe bet.

Cheers!

Interesting that the CC considers payments made to the kids from parents as 'income'.. maybe that is better than a salary

 

[Aerides]

One would think I accomplished the American dream. House paid off, cars paid off, etc. with a decent portfolio, but instead I’m a risk.

Rant over…

Think of credit risk as your grade for juggling. If you haven't juggled in 10 years, how good are you? No one knows, probably not as good as someone who juggles 3 balls every day and never drops one.

Your credit rating is not matched to your wealth, but your ability to juggle debt. It cares much more about your income and spending than what's in the bank. Just the way it works.

 

[Sunset]

I just dealt with this from a different perspective.

Without me realizing it, my last line of credit, a car lease, dropped off my credit report. Apparently, I haven’t had any lines of credit for over 10 years.

My credit score instantly dropped from 795 to 635 overnight. I was flagged as a risk due to no credit history.

I have two credit cards that I use for all of our expenses, but they are in my business name. Even though my name is printed on them, they are not reported under personal credit.

I applied for two personal credit cards. CitiBank denied my app and Chase gave me one with a $2,000 credit limit. Interestingly, I have over a million dollars in laddered cd’s with CitiBank but they don’t take that into consideration.

I ended up having our adult son add me as an authorized user on one of his credit cards and now I have 15 years of active credit. Within 30 days, my credit score went back up to 798.

.…

You should have 2 personal CC, even if you just use them for the odd purchase every couple of months, or auto pay of your internet or water bill, etc...

That would satisfy the credit score devil.

 

[Walt34]

Your credit rating is not matched to your wealth, but your ability to juggle debt. It cares much more about your income and spending than what's in the bank. Just the way it works.

You should have 2 personal CC, even if you just use them for the odd purchase every couple of months, or auto pay of your internet or water bill, etc...

That would satisfy the credit score devil.

I was thinking while reading this thread that must be it. I haven't had a mortgage for decades, a car payment for over ten years (made one payment, then paid it off) but I do keep four or five credit cards in sort of rotational use and my credit score bounces around 820 to 830's, apparently depending on the alignment of the moon and stars near as I can figure.

 

[Jackietime]

Another option for those wanting to help is to add then as an authorized user but not give them the card, their credit score will be positively impacted and you don’t have to worry about them going rogue and costing you money.

This works great.. My son was in his thirties when he realized I had helped him in this way. He told me he had wondered about that mystery account on his credit report that was such a boost to his credit!

 

[gayl]

Interesting.... I am assuming that YOU got the card and put his name on it... that would make you responsible for the charges as you found out..


I do wonder if HE got the card and put you as an authorized user it would be the same...


Edit to add... Had to look it up....




A credit card authorized user is someone who is added to another person's credit card account. An authorized user receives a card of their own to make purchases, but they aren't liable for payments.




https://www.experian.com/blogs/ask-experian/what-is-credit-card-authorized-user/

He was listed 1st on the account & I was listed 2nd. So I was liable. But when I overpaid it while closing it, the overage went into his account instead of mine.

 

[Sunset]

He was listed 1st on the account & I was listed 2nd. So I was liable. But when I overpaid it while closing it, the overage went into his account instead of mine.

Well don't hold your breath on getting repaid

 

[JoeWras]

"back in the day", JC Penny advertised their credit card in my college town. If you were a student, you qualified. It had a limit of something like $150. But it was great to buy some clothes and other stuff. It was designed to get you to like JCP and help the student build credit. It worked for me.

I guess those days are gone, but today one could instead get a secured credit card (put down $200 deposit) and build credit that way.

Does anyone do this, or do they just soak grandma now?

EDIT: reread gayl's post and she suggested that next time she'll do exactly that (point them to a secured card). Good move.

 

[Texas Proud]

He was listed 1st on the account & I was listed 2nd. So I was liable. But when I overpaid it while closing it, the overage went into his account instead of mine.

I guess I do not understand... you were listed 2nd... what does that mean...


If it was his CC and you were an authorized user it was his debt... you did not have to pay anything...


If you both signed for the same card then you were on the hook... just trying to get the correct info.