Declared bankruptcy? You can still be an authorized user

By Kim McGrigg

Credit Care

Kim McGrigg is Community Manager for Money Management International, where she provides personal finance education information to consumers. Ask a question 'Credit Care' archives

Dear Credit Care,
If I declared bankruptcy last year, would I be able to be listed as an authorized user on my wife's credit card account? She has perfect credit. -- Adam

Dear Adam,
Yes, your wife can add you as an authorized user on her credit card account. She can simply call the card issuer and request to add you as an authorized user on the account. A card will be issued in your name that is tied to your wife's account. I would recommend that you and your wife discuss before the card arrives how -- or if -- you will be using the card, so you are both on the same page.

Once you are added to the account, the account history will appear on your credit report. Since your wife has perfect credit, the account should be in good standing, meaning she pays on time and as agreed each month and doesn't exceed more than 30 percent of her credit limit if she carries a balance.

The positive information on your credit report from your wife's credit card account will help to boost your credit score, but that action alone will not work miracles for your credit history. You will need additional positive information reported to the credit bureaus each month to get you back on the road to good credit.

You might also consider applying for a passbook savings loan with your bank or credit union. These loans are secured by your own deposit with the bank and you repay the loan in monthly installments at a reasonable interest rate. Since the goal is to improve your credit, be sure that your lender reports the loan to the three major credit bureaus -- Experian, TransUnion and Equifax. If the account is not reported, it will not help you improve your credit.

A secured credit card might also be something for you to consider. These cards -- as the name suggests -- are also secured by your money that is on deposit and can be used just as any other credit card. Your credit limit will be based on the amount of your deposit.

With your wife's account and two accounts of your own, you will be well on your way to rebuilding a positive credit history to balance out the huge negative of your recent bankruptcy. Of course, you must make on-time payments as agreed on the accounts and give it some time. You should see significant improvement in your score in two years or more.

Remember that you cannot be discharged from another Chapter 7 bankruptcy for eight years following a previous Chapter 7 or six years after a previous Chapter 13. You cannot be discharged from a Chapter 13 bankruptcy for four years following a Chapter 7 or two years after a previous Chapter 13.

Handle your credit with care!

See related: What to expect when you're made an authorized user, How to boost your credit score from good to great, You're eligible for Chapter 7 bankruptcy, but should you file?

Kim McGrigg is the community manager for Money Management International, the largest nonprofit, full-service credit counseling agency in the United States. You can find more money management advice on Blogging for Change and MMI's Facebook page.

Credit Care answers a question about a debt or credit issue from a CreditCards.com reader each week. Send your question to Credit Care.

Published: July 4, 2011

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