Will debt settlement hurt authorized user's credit?

To Her Credit columnist 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.

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Question Dear Sally,
I have had three credit cards for over 30 years, never missing a payment. My husband is an authorized user on these three cards.

In the past, I always made as much money as my husband did. Now, due to health problems and loss of income, I have made the difficult decision to enter a debt reduction and settlement program with $65,000 in debt. The people at the debt reduction and settlement company told me that only my credit would be affected, not my husband’s.

I have verified with credit card companies that my husband is only an authorized user, but I notice the credit card accounts show up on his credit report. I have not been late on my credit card payments, but it’s getting harder and harder to keep up.

So my important question is, will my debt reduction and settlement affect my husband’s credit score? Should I call and get him off the cards as an authorized user? The credit card companies are certainly not expecting me to be late, because I never have been. This has been a very difficult decision for me. – Misty


Dear Misty,
As an authorized user, your husband is not liable for the balances on your credit cards, even if he uses the cards. You always have the right to remove an authorized user from your card, because the bank did not rely on his creditworthiness when they gave you credit in the first place.

His credit report and score can be negatively affected by your cards when he is an authorized user, however. If you start missing payments and your score goes down, his will, too.

The best remedy, assuming you want him to continue to have access to credit, is for him to acquire cards in his own name, and then have him removed as an authorized user. Either of you can make the request. One of you should call or write to all three credit card companies and have your husband removed from the cards. Once his name is removed, and his credit report reflects that information, these accounts should no longer affect his credit history or score.

I’m concerned that you are entering a debt reduction and settlement program, possibly without understanding exactly what you are getting into. Many people sign up for a program because it seems easier than contacting each creditor separately and figuring out a solution to the problem. The debt reduction and settlement companies convince you that everything will be taken care of, but can cost you big fees and ruin your credit history. In your case, I don’t believe you need their help.

First, it sounds like you only have three major debts. You could easily write to all three credit card companies in one afternoon to explain your situation and request a debt settlement (for step-by-step instructions, see: “Do you have what it takes for a DIY debt settlement?”). There’s nothing a debt settlement company can do that you can’t. In fact, you may have better luck working directly with the banks than a third party would. It hardly seems worth signing up with the company for so few debts, even when your balances are high.

Second, debt reduction and settlement companies are not free. You’re paying someone to do something you can do better and more easily yourself. You might as well keep your money to pay your debts or your own expenses.

See related: 8 myths about settling credit card debt, Credit card debt negotiation in 3 (not) easy steps

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Updated: 01-21-2018