Parents shouldn't pay for child's late card payments
Dear Credit Score Report,
My son gave us a credit card. He has since deleted us from
the account. It is his account though. He is late on the monthly payments, yet
this shows up on our credit report. What can we do? -- Theodore
Hey Theodore
,
As an authorized user on your son's credit card, his account
activity -- both positive and negative -- can appear on your credit report.
Once you are removed from that card, however, any account information listed on
your credit report should also get removed.
While that may take more time and require more effort than you'd like, it
will benefit you in the long run.
"If they were authorized users, the information should
not appear on their credit reports," says Steve Katz, spokesman for credit bureau TransUnion. "If they were joint account holders who have been
removed, the information would appear on their report. Negative information will remain on a report
for seven years," Katz says. Joint account holders share both the
responsibility for debt repayment and credit score impact of that debt.
Although you should check with the bank, it sounds like your
son had previously listed you as authorized users on his credit card, meaning
you aren't legally responsible for repaying your son's debt. Based on that arrangement,
the bank reported account information to the credit bureaus, which in turn listed
that data on credit reports for the primary cardholder (your son) and the
authorized users (you and your wife). That's not unusual, since many families
use this "piggybacking" technique to help build the credit histories
or improve the credit scores of their relatives. However, such arrangements can also turn sour, as it apparently did in your case, Theodore. That's because any credit mistakes made by the
primary cardholders can be listed on the authorized users' credit histories,
with a 30-day late payment dropping a FICO score by up to 110 points. Luckily,
getting removed from an account means those negative items should eventually fall
off the authorized users' credit reports.
As the primary cardholder, your son has the power to remove
you from his account. That's a power you have, too: A CreditCards.com survey of authorized user removal policies showed that American Express, Bank of America, Capital One,
Chase and Citi allow the removal of authorized users with a call or letter,
while Wells Fargo requires a phone call followed by a written request. While the
issuer should remove you from the card immediately, it can take a month or two
before the authorized account information disappears from your credit report. If
it's only been days or weeks since your son deleted you from the account,
additional patience may be necessary. "The
authorized user account should be removed very quickly. However, we encourage
the customer to allow 30 days to be certain the information is removed. Doing
so allows time for a complete billing cycle to end, ensuring the information is
no longer part of the report after a complete update period," says Rod
Griffin, director of public education with credit bureau Experian.
But what if you've been waiting
for some time -- or just want to speed up the process? In that case, contact the major credit bureaus -- Equifax, Experian and TransUnion -- and let them
know that although you have been removed from your son's account, the account
information remains on your credit reports. Also, just to be safe, call your
son's bank and make sure they are no longer sending card information to the
credit bureaus for inclusion on your reports.
Then, you'll need to wait once more. After some time has
passed, you should again pull your credit reports. Double-check that the
bureaus did, in fact, remove the negative information stemming from your son's
late payments. If they didn't fulfill your request, you'll need to contact them
again and repeat the process. Don't give up on making sure his late payments won't
damage your credit.
Whether or not your son is responsible with his credit, the
power to protect yourself remains in your hands.
Good luck.
-- Jeremy
See related: How to dispute credit report errors, Free credit reports: How to get the actual free one, Cardholders' mistakes can bring down authorized users' credit score, Piggybacking, meant to jump-start credit, can backfire, FICO reveals how common credit mistakes affect scores, Decade-old credit mistakes shouldn't appear on your report
Jeremy M. Simon is a former CreditCards.com reporter who wrote about credit scoring, economic data, credit card crime and other issues. He is based in Austin, Texas. He is a graduate of Vassar College and has previously worked for Thomson Financial in New York City, where he wrote about the stock markets, and Texas Monthly, as well as several publications in Austin.
Send your question to The Credit Score Report.
Published: April 6, 2010
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