Bankruptcy Authorized User
One of the main financial goals of debtors exiting bankruptcy is to rebuild their credit. There are several ways to accomplish this goal; but one method, becoming an authorized user on another person’s credit card account can be a bit risky for the post-bankruptcy debtor. Let’s take a look a few of the facts:
Hypothetically when a person becomes an authorized user on another person’s credit card account they automatically receive the benefits of that person’s good payment history and credit limit. Sounds like a sweet deal for a post-bankruptcy debtor, right? The problem is that the authorized user can also receive the disadvantage of taking credit damaging blows if the accountholder misses any payments, pays late or spends over their credit limit.
Authorized users have no power over the credit card account. They cannot control when the bill is paid, how much the accountholder spends or dispute charges etc. For the post-bankruptcy debtor, having control over their accounts is key to rebuilding their credit.
If a spouse or family member is made an authorized user on a credit card account, they could be treated as a joint accountholder making them liable for paying the credit card. In the state of Texas, spouses who are authorized users are considered and treated as joint accountholders. That means that a credit card company could go after a spouse who is an authorized user if the account becomes delinquent.
There are easier, more effective and safer ways to build your credit after bankruptcy. Even debtors who have just exited bankruptcy can get secured credit cards. Having a secured credit card in their own name allows them to build up their reputation and by extension their credit rating over time and eventually earn an unsecured credit card and other types of credit.