by Todd
Ossenfort June 15, 2009
Summary
Authorized users on your credit card have
two freedoms: to rack up debt on your account and to bail when it comes to
paying it off.
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Dear Credit Guy,
My sister was an
authorized user on a credit card of mine. She ran up a huge debt and is having
a hard time paying it. She is delinquent and my credit cards have been canceled
because of this. How do I repair my credit and get the debt in her name? — Kimberly
Dear Kimberly,
You use the word “was” in your question, and I am hoping that the use is correct and your sister can no longer charge on that particular credit card account or any other credit card account of yours. If you have not already, do not pass “Go,” and do not collect $200, but go directly and take her name off all your accounts.
You use the word “was” in your question, and I am hoping that the use is correct and your sister can no longer charge on that particular credit card account or any other credit card account of yours. If you have not already, do not pass “Go,” and do not collect $200, but go directly and take her name off all your accounts.
To transfer the debt
into your sister’s name and off your account, your sister will need to be able
to qualify for a credit card in her name only. My suspicion is that the reason
she was added to your account as an authorized user is that she could not get credit on her own.
If your sister’s credit is not very good, it is unlikely in the current tight credit
market that she will qualify for a credit card with a credit limit high enough
to transfer the debt.
I would, however,
recommend that she apply for a balance transfer credit
card to see what happens. If she does qualify for a card, she can
transfer as much of the balance that is owed on your card as her new card will
allow. That way, at least a portion of the debt will be her financial
responsibility.
Unfortunately, if
your sister does not qualify for a card in her own name, you will continue to
be responsible for her charges and will ultimately have to pay what is owed or
further damage your own credit. I would not let her off the hook, however, and
would continue to request that she pay what she can on the charges she made.
As far as repairing
your credit, time heals all wounds and improves credit. Moving forward, you
will need to add positive, paid-on-time and as-agreed account information to
your credit report and, with time (two years or more), your credit will
improve.
Continue to pay off
any balances on your credit card accounts that have been canceled. The fact
that the accounts were canceled is a negative, but not paying the balances that
are owed would be much worse for your credit history and score.
In addition, you will
want to be sure to pay what is necessary to make sure the account that your
sister used is made current as soon as possible. By paying the amount that is
past due, you will be taking the sting from the negative listings on this account.
The late payments will still show up on your credit report, but the account
will be listed as “current” moving forward and that will help to improve your
credit.
While you can’t pick
your relatives, you can decide not to provide financial support to them.
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