 Being
an authorized card user can help or hurt
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 Dear
Debt Adviser,
When I left for college, my parents gave me a credit card for emergencies.
It was their account and I was an authorized user on the account.
I never used the card.
Years later, long after I'd forgotten that my folks
had given me the card, my parents fell on hard times and wound up
living off the card and then missing payments and finally going
into collections on the account. My credit is now ruined to the
tune of $9,500 for debt I did not accrue and cannot pay. My parents
have promised to pay off the debt, but have not made any steps to
do so. I am frustrated and want to be free of their debt. What can
I do? Thanks!
-- Jessica
 Dear
Jessica,
Take a deep breath, and let's try to put this in perspective. There
is more at stake here than just your credit. I hope you don't mind
sharing my response with another reader. The timing of your letter
coincided with another reader wanting clarification on a recent
column regarding authorized users of credit card accounts, and I
can answer both of you at once. But first, this part is just for
you.
It sounds as though your parents love you very much.
They showed their concern for you by giving you a credit card for
which they were responsible. You could have been faced with any
number of real or imaginary emergencies, and they were willing to
put themselves on the line if you needed help. Well, stuff happens
to parents, too. My first advice is to cut them some slack and offer
to help. Your understanding, or lack thereof, when they need it
can color your relationship for years to come.
Now, for you both, what I stated in my previous
column is that while authorized users are in no way financially
responsible for charges made on a credit card account, the payment
history is reported on the authorized user's credit report. As you
have found, when the primary cardholder's payment history is not
so great, it negatively affects the authorized user's credit report
and credit score, even if the authorized user, as in your case,
did not make any of the charges to the account.
On the other hand, if a good payment history of the
primary cardholder is not for some reason appearing on your credit
history and you want or need it to be, contact the creditor and
request that the account be listed on your report as an authorized
user.
The first thing that I would do is to ask your parents
to remove you as an authorized user on the account. The current
negative listing will not be removed from your credit report, but
any additional negative activities associated with the account after
your name is removed, such as a judgment or wage garnishment, should
not appear on your credit report.
Due to the fact that you believe your parents are
not prepared to make good on the debt, the sooner you have your
name removed, the better. If, for some reason, your parents are
unwilling to have your name removed, contact the creditor in writing
yourself and request that your name be removed. The creditor also
might be unwilling, but it is worth a try.
The account should be listed on your credit report
as an authorized user. If it is not, file a dispute with all three
bureaus and request that it be listed correctly. Although this will
not help your score, it can be a positive talking point in future
loan negotiations.
One other thing that you may want to do is to add
a 100-word statement to your credit report at each of the three
bureaus explaining that you are an authorized user on the account
but did not use the card or contribute in any way to the unpaid
balance of $9,500. If you do this, be sure to remember to remove
the statement once the account is no longer an issue or it may raise
questions for you down the road.
Should you need to apply for credit before the issue
with this account is resolved, I suggest you be up front with all
potential lenders and let them know of the negative listing and
the history before the lender sees a copy of your credit report.
Honesty and communication go a long way with lenders. If all else
looks great on your report, this listing should not stand in your
way of getting the credit you desire at the rate you deserve.
Good luck!
The Debt Adviser, Steve Bucci, is the president
of Money Management International Financial Education Foundation
and the author of "Credit
Repair Kit for Dummies." Visit MMI
for additional debt advice or to ask a question of the Debt Adviser
go to the "Ask the
Experts" page to ask a debt question.
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