The risks of becoming an authorized account user for another person are numerous. It increases the risk of being sued by the account owner and can lead to missed payments. This could lead to a significant drop in credit score. Being an authorized user is a risky proposition. Here are some tips to help you avoid these potential pitfalls. These are just a few examples. These risks are not necessarily present in every situation, but it is a smart idea to be aware.
Liability of an authorized user
An authorized user can take over the credit of an account owner but the account owner remains responsible for any charges. You should have good credit to become an authorized user. Most card issuers will report unauthorized users to credit reporting agencies. It is important to check with the card issuer in order to verify that they report authorized user data if you are concerned about credit scores. The authorized user generally has no liability. However, if an account owner isn't paying, it can further harm your credit score.
Accordingly, you will not be responsible for lost profits or revenue, nor indirect, consequential damages. You will not be liable for punitive and exemplary damages. You are also only responsible for the costs of procuring and using Authorized User's services.
Adding an authorized user to a credit card
To add an authorized person to a credit-card, the primary cardholder must contact their issuer with basic information about the person using the card. The information could include the name, address, social security number, birth date, and date. After verifying this information, the card issuer sends a credit to authorized users.
It is possible to add an authorized person to a credit line by phone, online, or using a paper application. After the authorization process is completed, the authorized user should appear on your credit report at the end of each billing cycle. This process may take up to a month or less. An authorized user cannot be added to the primary account. This will not affect credit scores.
The primary cardholder should closely monitor authorized users' spending habits. Although adding an authorized user can improve a primary cardholder's credit score it is not advisable. However, the primary should remain responsible. It is common for secondary users to overspend and it is important to monitor the account's activity. Authorized users should not be added to credit accounts unless both parties are aware of the potential risks.
To add an authorized user in a joint account
Adding an authorized user to a joint bank account can have multiple benefits. It can help you budget, track your expenses, and earn credit card rewards. The only way to make a joint account more beneficial is to add an authorized person.
Because both of you are jointly responsible for any charges made to the joint account, it is a smart move. A joint account is a smart idea for married couples who want to share the responsibility of building credit and to build it together. You have the option of purchasing for your spouse. However, it is important to be careful about who you add to your authorized users.
While it might seem great to add an authorized person to a joint account, it's important that you remember that removing an account can be difficult, particularly if the other party has incurred debt. It can also negatively impact the credit score of the joint account holders.