As an authorized user, you will receive a credit card with your name and the account number of the primary cardholder. You can use the card at any time, but invoices will be sent to the primary cardholder.
Become an authorized user helps you build good creditbecause on-time payments can be reported to the credit bureaus under your name. It also gives you the convenience of a credit card, even if you can’t get one on your own.
Many people adopt this as a method of building or rebuilding credit. Parents can add children as authorized users to help them create credit. Or, sometimes one partner in a relationship will have a better credit rating than the other, and as an authorized user, the partner with less than stellar credit can still enjoy all the benefits of a high end. rewards card. Adding a partner as an authorized user has other advantages. Some couples find it convenient to share a credit card account. They can track spending more easily and earn rewards faster by using one card for all of their purchases.
An authorized user doesn’t even have to be a parent. A cardholder can name anyone they trust as an authorized user.
How to remove yourself as an authorized user
There are many reasons why a person might want to be deleted as an authorized user and the process is very straightforward.
If you are the cardholder
To remove an authorized user, call the number on the back of your credit card to reach the card issuer’s customer service number and ask for the authorized user to be removed from the account.
Sending a letter by certified mail referring to the call and customer service details – the name of the deleted user, the last four digits of the account number, and the date of the call – is one way. to ensure that the action has been carried out. Or, have recourse to the credit card issuer if this is not the case.
If you delete yourself as an authorized user
If you delete yourself as an authorized user on an account, the process is the same as above.
Step 1: Call your credit card company’s customer service number (located on the back of your card) and request to be deleted as an authorized user of the account.
2nd step: Follow up with a letter referring to the call to the customer service line, the date of the call, the last four digits of the account you wish to be deleted, and your full name. In case of error, send them by certified mail in order to have proof of your communication.
Please note that once you have done this you will no longer be allowed to use the card or redeem rewards. If you have set up automatic purchases with this card, be sure to go online and add another account, otherwise your purchases will be declined.
How is the process different for joint accounts
An alternative to adding an authorized user is to open a joint credit card account. In this case, the application is joint and the individual’s credit scores, income and financial history are used to make the decision to approve the card. In addition, both parties are also responsible for the balance of the card. Unfortunately, separating from a joint credit card account is not as easy, whether you are the primary user or a co-signer.
If you want to be removed from the account, you will need to call the credit card provider and be prepared to negotiate. If the other account holder can claim the card on their own, the credit card company may approve your request. Otherwise, your only option is to pay off any unpaid debt and close the account. You remain responsible for all payments and all activity will continue to be reflected on your credit reports.
Risks of Becoming an Authorized User on a Credit Card Account
Adding and removing authorized users is straightforward, but there are risks.
Most notably, the cardholder’s financial behavior can be reflected in your credit score – good and bad. For example, if the primary cardholder misses a payment, it could show up on your credit report and subsequently lower your credit score.
Experian says it does not report overdue payments on the authorized user’s credit report. Equifax and TransUnion may report positive and negative items for Authorized Users.
There are other nuances, for example, if you are added as an authorized user and the primary cardholder does not notify you of the available balance on the card, your the credit card could be refused.
How Being an Authorized User Affects Your Credit
Depending on the financial habits of the primary cardholder, becoming an authorized user can be good or bad. If the account holder makes payments on time and keeps balances low, your credit score may increase. This is why becoming an authorized user is often recommended as a way for students, young adults, or those with difficult credit histories to start rebuilding their credit.
On the other hand, if the principal cardholder of the card is regularly late in payment, make full use of card balances or carries a large balance, the credit bureaus could use this information against the authorized user.
Late payments can appear as derogatory marks on your Equifax and TransUnion credit reports. Your credit score could also suffer due to a high credit utilization rate, which is the second most important factor in determining your credit score.
What to do if the primary cardholder is in financial difficulty
If the primary cardholder is having trouble making payments, has made multiple late payments, or maybe even gone bankrupt on the horizon, you might not want your name tied to the credit card. .
All three credit bureaus will remove the account from your credit report upon request. This is the first and the most important step. Someone else’s financial mistakes shouldn’t affect your credit history.
Call the credit card issuer and ask them to stop reporting this account to the credit bureaus under your name and remove the account from your credit report. In most cases, it is advisable to call the sender and then follow up with certified mail so that you have a record of the exchange.
Follow up in about a month by requesting copies of your credit reports from the three credit bureaus to make sure the change has been made. You can get a free copy of each of your credit reports once a year at www.annualcreditreport.com.
If the account is still listed, you will need to file a dispute with the credit bureaus.
Remain as an authorized user
If you do not request to be removed from the account as an authorized user, you can continue to use the card. No activity will appear on your credit report.
It might be in your best interest to work with the cardholder and pay off the debt together, especially if you were responsible for certain charges. However, you are not legally obligated to make payments because the debt is not in your name.
The situation changes a bit if you are married to the primary cardholder. In communal property states, the spouse is legally responsible for debts incurred by a spouse during the marriage.
Community ownership declares:
- New Mexico
* Note: Alaska is not recognized as a community property state, but allows couples to opt for a community property relationship.
In other states, a non-signing spouse cannot be sued for debt.
The bottom line
Weigh the consequences carefully before tangling someone’s finances with yours. Becoming an authorized user can be a great way to increase your credit, but you should understand your responsibilities and take steps to protect your credit score if the other party is in financial difficulty.