Today marks 3rd day of 30 day credit tips on Authorized Users.
Authorized Users are just that, you gave them the AUTHORITY to use your credit card. Authorized Users are not obligated to pay for the charges they incur on YOUR credit card(s).
You may authorize another person to use an individual account in your name, but you are responsible for the entire debt. If you are an authorized user on another person’s account, you are not liable for the debt. However, the debt still may appear on your credit report.
The credit card will reflect on the Authorized User’s credit report. As part of checking your reports every quarter don’t forget to check your credit card Authorized Users and remove them if needed.
When you give someone else access to your credit card account as an authorized user, it means both you and the authorized user may make purchases. This can impact the primary cardholder’s credit utilization ratio, which accounts for 30% of a credit score.
For example, if an authorized user goes on a massive spending spree and charges more than a primary cardholder is able to pay back, even as a minimum monthly payment, the primary cardholder’s payment history, the single largest factor in determining a credit score, can be negatively impacted. Payment history accounts for 35% of a credit score.
That’s why it’s so important that an authorized user act responsibly when making credit card charges. And why it is so important that the primary cardholder monitors the spending on the account carefully and pays the account as agreed.
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