Credit Card Gist

If you are an authorized user of a credit card account, you may be wondering what your legal responsibilities might be if the account became delinquent or charged off, whether the fault was yours or the primary cardholder’s. That is precisely the question that a CreditCards.com’s reader asks of Todd Ossenfort, the financial website’s credit expert.

It is important to differentiate between an authorized user and a joint cardholder, cautions Ossenfort. While the former is not financially responsible for the account, the latter is. “The account owner is responsible for all account activity generated by any and all authorized users,” according to Ossenfort. A creditor may try to collect an unpaid balance from an authorized user, but the authorized user is not liable for it and may request that the creditor does not contact them again in the future.

The bad news is that, while an authorized user is not financially responsible for the account, any negative activity on it may be listed on his or her credit report, just as all regular payments and other positive actions will help build the user’s credit history.

(Via CreditCards.com)

Typically it works the other way around: the child becomes an authorized user of a parent’s credit card and starts building credit history. One couple, however, have both been added to their son’s card and have lived to regret it. The son was late on payments and it reflected on his parents’ credit reports, as well as on his own. Now the parents have removed themselves from the account and have turned to Jeremy M. Simon, CreditCard.com’s expert on credit scores, for advice on how to clean up their credit history.

Once an authorized user is removed from a credit card account, the negative information associated with it should be deleted from the consumer’s credit report, according to Simon. It may take some proactive effort on the consumer’s part, but it is well worth it.

“If they were authorized users, the information should not appear on their credit reports,” confirms Steve Katz, spokesman for credit bureau TransUnion. “If they were joint account holders who have been removed, the information would appear on their report. Negative information will remain on a report for seven years,” he adds.

So anytime the primary holder of an account you are an authorized user of gets into trouble, you should make sure that payments are made on time. If that is not going to happen, get yourself removed first, even if it is your son’s account, and then try and help your child get back into a good financial shape.

(Via CreditCard.com)