Let’s say you have family or friends who are struggling with their credit scores. They ask or offer to add them to one of your credit cards as certified users. What’s not going well?
For beginners, add someone Certified Users Your account will help the person establish a credit history and potentially increase their credit score. Authorized users can receive their own credit card and charge their accounts.
But what happens if an authorized user gets fraudulent with a credit card? Not only does this distortion work, it can also damage your credit card and spend money on it. The following three cases show what happens when certified users use the kindness of their cardholders and the lessons they have learned as a result.
Save your cousin who is in trouble
Performance and Personal Branding Coach Jasmine Charbonnier has made her cousin her certified user Capital One Quick Silver Cash Rewards Credit Card March 2020, at the start of the Covid-19 pandemic. “He really struggled to achieve his goal. I wanted to help his family. “I thought it would be temporary until he recovered.”
Charbonier said the first red flag began to appear in about three months. “I started looking at prices at bars and gaming stores,” she says. “The spending was bigger and more frequent, he promised to pay, but there were always excuses. My use of credit continued to climb higher.”
Six months later, Charbonier knew that she had to make a tough call after more red flags appeared. “I found out he wasn’t looking for a job seriously. My credit score was reduced by 85 points and I maximized my card twice,” she says. “The last straw was a $1,000 fee at GameStop, which he hadn’t consulted with me. It came right after I promised to cut my spending and put my card at almost the limit.”
However, when the time came, Charbonier discovered that making the decision to remove a cousin as an authorized user is more difficult than actually doing it. “I called my credit card company and the process only took about 15 minutes (to remove him),” she says.
When she went through the removal of her cousin, Charbonier found a pending fee of $250, in addition to almost $5,000 on the card. “I was legally liable, so I ended up paying it all back,” she says.
Before adding Charbonier’s cousin, my credit score was about 780. It was almost perfect. “But that dropped to 695 at the lowest point,” she says. “The high utilization really hurt my score and it took me about six months to recover.”
Then it was time for Charbonnier to have what she called “nasty conversations” with her cousin. “I texted him first (because I was too nervous about the phone,” she says.
After her cousin is removed, Charbonier points out that the family gathering has been “uncomfortable” for a while. “My credit score slowly began to recover, and my cousin started talking to me barely. It hurts honestly. Looking back, I had to set clear boundaries from the start.”
This whole situation taught Charbonier some difficult lessons. “The blood isn’t thicker than your credit score. Don’t mix your family or finances without clear rules. Sometimes it actually allows for bad behavior,” she says. “It’s okay to say no. It’s okay for my family too.”
I’ll make tough decisions
Liam Lafferty, founder of Software Company Zentive, says that he had to make some tough decisions when it came to managing credit and finances. He was forced to remove authorized users from his siblings American Express® Business Gold Card After putting him in his account for 18 months.
The turning point for Lafferty came when he realized that the $900 fee hadn’t been paid for three months. “I called Amex and let them know about the situation,” he says. “I had to pay back the remaining $900 balance. They then deleted my authorized users from my account.”
Laffery realizes that his brother is not using the cards responsibly. “His fees were beginning to affect my credit score,” he said, noting that his score had dropped by 50 points as a result. “It wasn’t an easy conversation, but in the end, protecting both my financial health and our relationship was the right choice.”
Building credits to the university
Dean Rotchin, CEO and founder of private jet travel membership company Blackjet, has made his sister his certified user Chase SapphirePreferred® Card So that she can build her credibility when she starts college.
After holding the card for two years, Lotkin found an unexpected fee on the card. It’s a $3,200 purchase at Nordstrom. “This was completely outside of our agreement. We were arguing that this card was primarily due to emergencies and basic necessities while she was at school,” he recalls.
An additional $800 pending fee was added to my account before Rotchin deleted her sister. “She was a licensed user when those fees were paid, so I was responsible for paying them back. It was over two months to avoid interest,” he says.
The removal process was emotionally drained, Rockin says. “My sister and I have always been close by, and having to make that call feels like a violation of trust in our relationship,” he says. “The Chase representatives were professional and fast, but I felt guilty and worried about how this would affect our relationship.”
Luckily, deleting his sister did not affect his credit score. “But it affected her. When the account was removed from her credit history, it fell about 30 points,” he says.
Help others, but protect your credit
Adding authorized users to your credit card may seem like a good thing to help friends and family. However, if you are not careful, you may be on the hook, regardless of the unpaid fees that appear on the card.
To protect yourself, please check the monthly credit card statement for changes to your card spending on certified users. This will help you become proactive when you need to cut off someone. Find suspicious activities with our free weekly credit report on AnnualCreditreport.com. Also, keep track of your credit score regularly to monitor your potential drops.
Experian It says it will not report late payments on its credit report for authorized users. However, Equifax and Transunion may report both positive and negative items to certified users.
Despite what happened to him, Rotchin says he will allow another certified user on his card, but he has very different parameters including:
- Clear written agreement regarding spending restrictions and acceptable purchases
- Monthly reviews of all prices
- Immediate notifications for purchases over $100
- Share access to card apps for transparency
- “Three Strikes” Rules for Unauthorized Purchases
“This experience taught me that even with my family, there is a need for clear boundaries with finances,” Rockin said.
Charbonier will also consider adding certified users to the cards in the future, but there are strict conditions. “I want to have (use) terms and restrictions on monthly spending that I will spell out in writing,” she says. “We will check in regularly about fees, clear repayment schedules and emergency-only usage rules.”
Conclusion
It’s important to monitor the spending habits of those who add them as authorized users, says Lafferty. “It’s great to help family and friends, but sometimes you need to draw economic boundaries for long-term stability,” he says. “Before adding someone as a certified user, having clear communication about expectations and outcomes helps avoid these types of situations entirely.”
