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Create a separate credit identity after divorce

Being an authorized user on ex's credit cards is risky

By

To Her Credit
To Her Credit, Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets.
Ask Sally a question, or read her previous answers in the To Her Credit archive
Question for the CreditCards.com expert

Dear To Her Credit,
My ex-husband put me on as an authorized user for two of his credit cards. After discovering he has not been paying his balances, I checked my credit report. The credit card companies are reporting me as late on my ex's credit cards.

Can they legally do this, and do I have any recourse? I am not a joint account holder with him -- only an authorized user. -- Paula

Answer for the CreditCards.com expert

Dear Paula,
Yes, they can. But your recourse is simple.

Being an authorized user on a credit card sounds like a win-win deal -- even with an ex-husband. You use the card, but he pays the bill. You are not responsible for the balance. The card is reported on both of your credit histories (although it may or may not affect your credit score, depending on the model), so if the credit card has a long, good history, it may help your credit score. What's the catch?

The catch is this: If the credit card has a not-so-great record, it's still reported on your credit history. That's why you should think twice about accepting an offer to be on someone else's credit card. You have no control over how and when the card is used, yet you share the pain if it's not used and paid responsibly.

For this reason, you should get off these cards. "She needs to remove herself as an authorized user," says Andy Jolls, CEO of VideoCreditScore.com. "If you can get credit on your own, you should not be an authorized user any longer. In her case, she needs to call the credit card companies and have herself removed as an authorized user."

If your ex put you on the cards as a way of paying support to you, there has are better ways to do that. A good old-fashioned check, or one sent by online banking, leaves a much better record. (As a side benefit, he doesn't need to know exactly what you're spending money on that way. Which is arguably none of his business!)

The next thing you need to do is start getting your own cards, if you don't have them already. You might have better luck getting them after your ex's delinquent cards are off your record. It's fairly easy to get started with a store or gasoline card, and then try for a major credit card after a few months. You could even get a secured credit card to start -- that's a card that requires you to have money in an attached account to equal your credit limit. Secured cards are a great way to prove your creditworthiness at no risk to the bank.

You're in complete control now, so now's your chance to keep your credit record flawless. Think of your cards as payment tools, not loans, and pay each balance as soon as you receive the bill.

Don't try to improve your credit by getting lots and lots of cards. It won't help. There's no reason to keep a balance or buy anything you wouldn't otherwise. The best way to build your credit is slowly and steadily, by being one of those boring credit customers who is never late on a payment and never, ever goes over the credit limit.

Remember, your credit score affects not just whether or not you get the next mortgage or credit line you apply for. Your credit score can affect your interest rates and even whether you get a job. You may not ever know that your credit score was the deciding factor in something that affected you profoundly. That's why it's so important that you take action to protect your score -- today.

See related: Divorce and debt stories and advice, Establishing credit after divorce, Dividing credit card debt in divorce, How being an authorized user can hurt your credit score, Authorized user or joint account holder?, Credit checks become more common in hiring decisions

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Published: July 24, 2009


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