Credit Card..non-primary user

[jtgain]

If a person adds me as a user on their credit card, and then they fail to pay their bill, can it affect my credit report adversely?

[ZipperJJ]

You might want to ask the card issuing bank directly, and see how they report it. I think it's up to them how they report it.

FWIW, I added a friend to one of my cards as a way to increase his credit score (he couldn't get his own card, the score was too bad). He got his own card with his own name on it, but my account number. I let him use it like his own card, I don't put anything on it. After a year or so, it did indeed help his credit score.

So, one would think that the opposite could be true as well. If he messed the card up, or if I did, it'd hurt us both.

[Roland Orzabal]

There are two possible ways to add someone to a personal* credit card: as a coapplicant, or as an authorized user.

If you are a co-applicant, then your name, social security number, and other personal information are associated with the card, and you are a co-owner of the account. You have as much authority over the account as the primary owner, and it can and will affect your credit report.

If you are an authorized user, then the only thing the bank generally knows about you is the name that's printed on the front of the card. You may use the card, but you have no authority over the account; you cannot close it, make changes to it, or even (in some cases) have access to the balance and transaction information. You have no liability whatsoever for any debt on the account, and it will not affect your credit.

Basically, if you never gave anyone your SSN and you didn't sign anything, you're in the clear.

*Business credit cards are a whole other kettle of fish and a good deal more complicated; if you're on somebody's corporate account, let me know and I'll elaborate.

[jtgain]

Originally Posted by Roland Orzabal

There are two possible ways to add someone to a personal* credit card: as a coapplicant, or as an authorized user.

If you are a co-applicant, then your name, social security number, and other personal information are associated with the card, and you are a co-owner of the account. You have as much authority over the account as the primary owner, and it can and will affect your credit report.

If you are an authorized user, then the only thing the bank generally knows about you is the name that's printed on the front of the card. You may use the card, but you have no authority over the account; you cannot close it, make changes to it, or even (in some cases) have access to the balance and transaction information. You have no liability whatsoever for any debt on the account, and it will not affect your credit.

Basically, if you never gave anyone your SSN and you didn't sign anything, you're in the clear.

*Business credit cards are a whole other kettle of fish and a good deal more complicated; if you're on somebody's corporate account, let me know and I'll elaborate.

Well, here's the deal. My sister had poor credit when she got married. Her new husband had existing credit cards. He added her as an authorized user (it was authorized user because she couldn't get a card on her own). She used the card for several years.

Now, her credit is almost back to normal, but she is separated from her husband. Apparantly he hasn't been paying the bills, and now the CCs that are in HIS name only are showing on her credit report as being late. Is this legit or should she challenge it?

[Sateryn76]

Been working as bankruptcy paralegal for 10+ years....

Yes, if you are an authorized user, you are on the hook for 100% of the bill. Even if the other party flies to Vegas, runs up $70K in debts, and drops dead, you are on the hook for the bill. This includes your credit report, collection agencies and being sued for payment.


Always use caution - think of it as putting someone on your bank account.

[jtgain]

Originally Posted by Sateryn76

Been working as bankruptcy paralegal for 10+ years....

Yes, if you are an authorized user, you are on the hook for 100% of the bill. Even if the other party flies to Vegas, runs up $70K in debts, and drops dead, you are on the hook for the bill. This includes your credit report, collection agencies and being sued for payment.


Always use caution - think of it as putting someone on your bank account.

So is this guy wrong?

"...Such a change is logical for many spouses who are now authorized users on their significant other's account. However, it's important to note that unlike authorized users, joint users are legally responsible for repaying any outstanding card balance.>

http://www.bankrate.com/brm/news/DrD...s_score_a1.asp

[Sateryn76]

Originally Posted by jtgain

So is this guy wrong?

"...Such a change is logical for many spouses who are now authorized users on their significant other's account. However, it's important to note that unlike authorized users, joint users are legally responsible for repaying any outstanding card balance.>

http://www.bankrate.com/brm/news/DrD...s_score_a1.asp

He's talking about the FICO score, which are the guts of the credit report, but not the report itself. So, one of the reports from Equifax (or whichever credit reporting agency) may list the negative debt on there, but it will not be reflected on the FICO score. As to how this will affect her credit, it depends on who's reading the report.

I'd be more worried about the collection aspect of it - are they going to be contacting her to pay the bill? She should read the contract carefully and make decisions from there.

[Roland Orzabal]

Sateryn76, I don't know if we're on different pages or what, but what you have written above is incorrect. I worked as credit card systems analysis manager for one of the largest banks in the U.S. for years. Authorized users DO NOT have any responsibility for credit debt; they can't, because the bank has absolutely no information on them beyond a first and last name, and they don't even verify that. No personal information is collected, nothing is signed, no agreements are reached between a bank and an authorized user. We could not perform collections on an authorized user any more than we could sue somebody's "DBA" alias on a checking account...it's nothing more than a name in a database.

With a business credit card, there are three (or more) levels of account ownership, such that certain persons may have liability for the debt while not having full "owner" authority over the account. I suppose there may exist a personal account that is set up similarly, though I've never heard of such a thing. In all cases, though, an Authorized User -- as opposed to someone who is authorized to use the card, which category may include people other than the primary owner who DO have liability for the debt -- does not have any responsibility for the account.

[Roland Orzabal]

Missed the edit window (well, the second time anyway). More information on what I'm talking about can be found here. Banks may try to identify, track down, and collect from authorized users. However:

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.

Of course, while the AU is in the process of fighting the collection, it will appear on their credit report (which is what the above article warns about). With regard to actual liability, though, the authorized user has none.

[Sateryn76]

Originally Posted by Roland Orzabal

Sateryn76, I don't know if we're on different pages or what, but what you have written above is incorrect. I worked as credit card systems analysis manager for one of the largest banks in the U.S. for years. Authorized users DO NOT have any responsibility for credit debt; they can't, because the bank has absolutely no information on them beyond a first and last name, and they don't even verify that. No personal information is collected, nothing is signed, no agreements are reached between a bank and an authorized user. We could not perform collections on an authorized user any more than we could sue somebody's "DBA" alias on a checking account...it's nothing more than a name in a database.

I must disagree from a collection standpoint. It is very easy to get information about anyone using just a name and a billing address, and collection agencies do that all the time. That's why getting a hold of the contract is very important, because I have read ones that say an authorized user is liable. This may not be from a major US bank - it could be part of the "Value City" 2nd tier credit issuers.

[Roland Orzabal]

Originally Posted by Sateryn76

I must disagree from a collection standpoint. It is very easy to get information about anyone using just a name and a billing address, and collection agencies do that all the time. That's why getting a hold of the contract is very important, because I have read ones that say an authorized user is liable. This may not be from a major US bank - it could be part of the "Value City" 2nd tier credit issuers.

Ok, then we were coming at the question from different angles. As I said, banks may well try to collect on debt from authorized users, but they're under no obligation to pay; they have made no agreements and have no actual liability for the debt. Still, fighting the collections process is a hassle, and a possibility that AUs should be aware of, so it seems we're both correct.

ETA: I realize I said above that the bank "could not perform collections on an authorized user", which which was poor phrasing on my part; I was referring to actual liability, not what certain banks might try to do...Lord knows there's no accounting for that.

[Harriet the Spry]

Does the fact that the people involved are married affect responsibility for the debt, regardless of how the credit card account is established?

[Sateryn76]

Originally Posted by Harriet the Spry

Does the fact that the people involved are married affect responsibility for the debt, regardless of how the credit card account is established?

This may vary state by state, so YMMV...

In Indiana, generally, for purposes of splitting debt of a married couple, only medical debt is assumed to be "joint" debt. So far as other consumer/business debt, it goes back to the contract signed by the Debtor, and if only wife is on an account, then only wife is responsible.

[jtgain]

So let's see, this debt is allowed to show up on her credit report, but cannot be used in determining her FICO score, nor can she be held legally liable for repaying the debt. However, a collection agency may try to dupe her into paying, but a cease and desist letter should end the calls?

Is this what the two experts here agree on?

[Otto]

Originally Posted by Roland Orzabal

Sateryn76, I don't know if we're on different pages or what, but what you have written above is incorrect. I worked as credit card systems analysis manager for one of the largest banks in the U.S. for years. Authorized users DO NOT have any responsibility for credit debt; they can't, because the bank has absolutely no information on them beyond a first and last name, and they don't even verify that. No personal information is collected, nothing is signed, no agreements are reached between a bank and an authorized user. We could not perform collections on an authorized user any more than we could sue somebody's "DBA" alias on a checking account...it's nothing more than a name in a database.

While I agree that AUs have no obligation for the debt and that it shouldn't be reported on the AU's credit report, for at least the several hundred banks my company services we do collect the Social Security number and date of birth before adding an AU.

[Hockey Monkey]

Originally Posted by Roland Orzabal

If you are an authorized user, then the only thing the bank generally knows about you is the name that's printed on the front of the card. You may use the card, but you have no authority over the account; you cannot close it, make changes to it, or even (in some cases) have access to the balance and transaction information. You have no liability whatsoever for any debt on the account, and it will not affect your credit.

Basically, if you never gave anyone your SSN and you didn't sign anything, you're in the clear.

*Business credit cards are a whole other kettle of fish and a good deal more complicated; if you're on somebody's corporate account, let me know and I'll elaborate.

bolding by me

FALSE!

I've seen too many credit reports. An authorized user isn't responsible for the card, but it does affect their credit either positively or negatively. The new FICO 8 model is taking this out of the equations, but one of the credit reporting agencies will not be using the new model to calculate scores. Right now though, you can definitely be adversely affected if the primary user does not manage the card properly. This is according to an article F&I magazine (I think it's the current one, it's at work.)

[Roland Orzabal]

Okay, again, from a practical standpoint, a bank MAY collect SSN and other personal information regarding an authorized user; there's certainly nothing stopping them from asking for this information. As a potential result of this or of collections processes, it MAY end up showing on your credit report. There are plenty of banks out there and I can't account for all of their practices. Collections agencies may well try to collect from your dead grandmother; it doesn't mean they have any right to do it.

As I have cited, there is no actual LIABILITY for an authorized user on an account. Further, my former employer (and its associate banks) did not collect personal information regarding authorized users, which information is necessary for reporting to credit agencies, so there is clearly no requirement to do so. I would advise an authorized user who has found records of that account on their credit reports to file a dispute with the credit bureau from which the report was received.

I have already retracted my previous phrasing that being an authorized user "will not" affect your credit or get you sent to collections. I hereby amend this to "should not", with an addendum that if it does, there are channels that can be taken to correct it.

[Sticks and Scones]

Still working on trying to right the situation so I don't know the outcome... However, I am/was an authorized user on someone's account. They didn't pay and now I'm on the hook for their $12,000. As a matter of fact, there's a judgement that's been filed against me in a court case that I didn't know existed until after it showed up on my credit.