Authorized User Troubles

For just about anything you want to get off your chest about credit cards.
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LancerPilot
 
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Authorized User Troubles

Postby LancerPilot » Tue Aug 25, 2015 4:16 pm

Good Afternoon to everyone, completely new person here.

I just joined this site to hopefully, maybe, get some advice or answers on a slightly sticky situation I have at the moment.

My name's Mark, I have several credit cards in my name, most I do not use, just a few (the higher limit cards) that I keep in my wallet.
This situation is sort of strange, bear with me. It regards credit, authorization of another user and trust. Last year, I applied for and was issued a few higher limit credit accounts, one with Citi Bank, one with Chase, and one with Discover. My mother was in the midst of rebuilding her credit, and she asked if she could be added on to the Chase account, and get her own card - being the type of person that likes to help out when needed, and since she's my mother what son wouldn't oblige? I did, and a few weeks later she got her own card in the mail.

Here's where it gets quirky - and this is where I admit I made a ridiculous mistake: She offered to pay the monthly balances off her own bank account for whatever she spends on it, and I would simply transfer the amount I owed each month over to her account, and she'd pay my half. She would keep track of the spending, and I figured that would be fine, but I told her that I had plans to build my credit up and so can she, as long she stayed within predetermined limits on this card. I made a mistake because I should've known I wouldn't know the account balance each day and what the utilization rate was. I didn't see this at the time and thought nothing of it. My fault here for sure.

Fast forward, the same thing happens with the other cards. Same situation.

About three months ago, I was at the grocery store paying for groceries when I swiped my card and the transaction came back as denied. She had told me she was paying the cards each month, I was supplying my half for them as well. So what gives? I immediately suspected the cards were being paid, but nowhere near in proportion to the amount being charged on them. It turned out that I was right in my suspicion. Basically all three of these high limit cards were maxed out, literally each one was at a whopping 96% of the their limit! Each one. One was at $5,900, one at $2,400 and one at around $900. I had NO idea at all, that she was spending this amount. She was making payments alright, but not barely enough to cover a considerable fraction of the balance! When I confronted her about this, my mother, whom since I was a child, saw as somebody who knew how to handle finances sufficiently well just stood there and being the emotional person she is, got quiet and said "I'm sorry" whilst holding back tears. She had also other cards of mine that she was authorized to use, luckily she paid those down (I didn't spend any on them, they were very low limit) and during the several months of this escalating issue, she was using up to seven or even nine cards. I'm no expert on this, [b]but there is positively no way I'd use eight cards[b]. No way. I had planned on seeing no more than 30% to 40% of the cards' limits being used, and it turns out each one is busted flat.

Here are my questions:

(1): Will this seriously dent my credit history for the next seven years? These cards are being paid down, I recall there being only one delayed payment, it was about two weeks late. They are being paid down, but in small increments. Payment size ranges between $150.00 to $300.00 per month.

(2): Although part of me says its a little irrational, I'll ask anyway; Is there anyway to possibly resolve this? I will pay these down, these accounts are in my name, but it also peeves me to think that all this started because my mother doesn't think things through very well at all it seems like. She can be impulsive and reactive, I guess I'm discovering this applies to her financial management skills as well.

(3): Since I do have this unintentional debt, I'm assuming this is going to inflict upon my chances on acquiring a student loan? I am sure it will, but to what degree? I'm trying to get my flying career lined up, it certainly costs money, all this was thrown on me and now I have yet another obstacle to negotiate.

To round up, I'm paying these down, I told my mother not to use my cards - requested she remove herself from my accounts, and she's complied.
I think I also just need to vent a bit, I usually am the type than can swallow a lot of BS and then some, but this was something I had to talk about.

Thanks very much to anyone who read this. I appreciate the time and patience.

Kind Regards to everyone.


Vermonster
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Re: Authorized User Troubles

Postby Vermonster » Tue Aug 25, 2015 6:51 pm

You need to pull a copy of your credit reports. Get your free annual reports from Experian, Equafax, and Transunion. You need to know exactly what is on there.

Now, good news is that a maxed out card is not a big deal in the grand scheme of things. Utilization numbers have no history, so once their down, no one will care how high they were. Any late payment is going to have a significantly larger impact. So you can try talking to the creditors and asking them to remove the lates with a Letter of Goodwill. But I'm 99% sure they won't do anything.
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whit
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Re: Authorized User Troubles

Postby whit » Tue Aug 25, 2015 7:39 pm

Wow that sucks. Especially when it's someone like your mom.

Hopefully the only delayed payment was by two weeks, usually creditors won't report you're late until thirty days past.

I would cut her off from all of your accounts as AU.

I would figure out the balances owed, and come to her with a reasonable figure to pay off--factoring in any APR charges for cards like CSP.

Unfortunately if she can't pay it down faster--you would have to or your credit scores will be impacted but that shouldn't matter unless you need to apply for cc..I think with school and school loans you can speak with a counselor--I don't recall having them pull my credit to determine whether I qualify and if so how much--when I had to take loans for the last year of my school.

Best of luck..I think it isn't as bad, but you have to really figure out a way to help your mom while distancing yourself imho

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lobbythis
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Re: Authorized User Troubles

Postby lobbythis » Tue Aug 25, 2015 8:12 pm

Some people just can't handle credit or having access to large amounts of money in general and they will never learn.

I have some of the same issues in my family and that's why my credit cards and bank accounts are all but a mystery to anyone but myself. You seem pretty level-headed and others have advised you the same as I would. Get whatever money you can, distance yourself (or at least your money) from her and just focus on keeping those monthly payments in check until you can get your finances back to normal.

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Re: Authorized User Troubles

Postby rockyrock » Wed Aug 26, 2015 9:08 am

I've been through this with my mom, but on a smaller scale. I never gave her access to more than one card. It is hard to deal with though and I learned.

It doesn't sound like there is any perm damage yet as long as you get it under control and pay down the balances. Like others have said, utilization is a short=term issue whereas late payments can stick around for years. Do what you have to pay down the debt focusing on being on time.

If you have learned from this than it isn't all bad.
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Re: Authorized User Troubles

Postby takeshi » Thu Aug 27, 2015 10:30 pm

That does suck but why weren't you monitoring your own accounts and aware of the balances?

If you want to play it safe you can make someone an AU and not give the person the card.

LancerPilot wrote:I made a mistake because I should've known I wouldn't know the account balance each day and what the utilization rate was. I didn't see this at the time and thought nothing of it. My fault here for sure.

Why would you not have had access to your own accounts?

LancerPilot wrote: Although part of me says its a little irrational, I'll ask anyway; Is there anyway to possibly resolve this? I will pay these down, these accounts are in my name, but it also peeves me to think that all this started because my mother doesn't think things through very well at all it seems like. She can be impulsive and reactive, I guess I'm discovering this applies to her financial management skills as well.

What are you looking to resolve aside from the problem with your credit? You can't force your mom to change. Helping her if she is aware of her problem and wants to change is really beyond the scope of this site.

LancerPilot wrote:Will this seriously dent my credit history for the next seven years? These cards are being paid down, I recall there being only one delayed payment, it was about two weeks late. They are being paid down, but in small increments. Payment size ranges between $150.00 to $300.00 per month.

Your credit will recover as your utilization drops. However, if you have cards that remain at high utilization for a long time, adverse action (credit limit decrease, balance chasing, account closure, etc) may be possible. It is possible to recover from adverse action but it can be more difficult.

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Re: Authorized User Troubles

Postby Kevin86475391 » Fri Aug 28, 2015 3:23 pm

I'm so sorry you've had to go through this. I know it's a major toll on both your finances and your personal relationship.

My advice would be to look at this from both angles - your credit score/finances and your relationship with your mom - both separately and then see how they can best be reconciled in relation to each other.

For your credit you need to do the following:
-Revoke her authorization on all the cards. Don't have her do it. You need to do it yourself and make absolutely sure it's been done. You shouldn't need to involve her any further with this since you've already had that conversation and she agreed anyway. Regardless, as the primary account holder it's completely up to YOUR discretion who is or isn't an AU and you don't need the person's consent to remove them.
-Pull your credit reports from each of the three agencies and make sure there aren't any lines of credit open that you don't know about and have complete control over. Hopefully not, but it's possible she may have 'felt justified/excused' opening an account in your name without your knowledge since you'd already made her an AU on other accounts.
-Confirm that there aren't any reports of lates, except possibly the one you know about. Chances are if it was only 2 weeks it wasn't reported. However, if it was that damage has already been done and will get better over time, at least it's not a 60-day or 90-day which are much more serious. HOWEVER, if it is reporting as a 30-day, you could at least try to get it removed. Call the card company and explain the situation, take full responsibility for it (don't blame your mother and definitely don't blame them or imply that they owe you anything) and say that you've removed her as an AU, learned your lesson, and are diligently paying down the debt. They may or may not be willing to remove the late, but either way you don't have anything to lose.
-Focus less on the utilization - which as others have pointed out is a temporary problem that won't penalize you at all once the cards are paid off - and focus much more on ALWAYS making on-time payments for at least the minimum or more every month. A single late is a much more difficult, long-term problem for your credit score than a temporary high utilization.
-However, do make paying down the cards a high priority. Prolonged high utilization could result in the card issuers lowering your available credit to just above the limit, which prolongs the problems it causes your credit and creates a bad spiral.

Primarily look at this as a learning experience and try not to stress out about it too much. It can feel overwhelming, but you'll absolutely be able to get past it. If it helps, think of all the people in recent years that found themselves upside down in mortgages or out of jobs and living off credit cards - even many of them have rebounded now, and your situation isn't nearly so dire.

From a personal perspective, I would advise against holding it against your mother or yourself too much or playing the blame game. Definitely DO take away the lesson that you need to take away - that you're always the number one person responsible for your personal finances and that you have to be vigilant at all times about any and all accounts in your name, whether you're actively using them or not - but don't beat yourself up either. Live and learn and accept that mistakes happen.

It sounds like your mom absolutely didn't intend to do anything that would harm your finances or your future. She just made a mistake and it sounds like she feels bad about it. In the long run your relationship with your mother is MUCH more important than a few thousand dollars. Set firm financial boundaries and don't ever get in a situation to let something like this happen again - with her or ANYONE else - but don't let it wreck your personal relationship.

IF she can give you extra money toward the debt that she spent, then that's great, but unfortunately legally it's all completely yours, and from a personal perspective, chances are it didn't happen on purpose and probably indicates that she was already struggling and likely isn't in a position to pay it down. Again, I'd focus less on the money - especially if she doesn't have it anyway - and more on just making sure it doesn't happen again and fixing the relationship and the financial situation. Definitely let yourself be upset and angry and vent to people, but don't let it become toxic or prolonged.

If it is a major burden on your finances, you might consider a debt consolidation loan from a lender like Prosper or Lending Club, or a traditional bank or credit union with rates lower than the APR you're paying. Another option - which I would advise extreme caution on and wouldn't actually recommend - would be to pay the debt with a student loan since it sounds like you're a student, but really this should be a major last resort. Unlike credit card debt, student loans aren't dischargable in bankruptcy and can ultimately be MUCH harder to get rid of. It's also obviously not what they're intended for. So only do that if you truly have to do it to get by every month without further falling behind on payments.

Take care and good luck! You'll get through this!

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Re: Authorized User Troubles

Postby pdunncentury21 » Tue Nov 03, 2015 8:38 pm

This is actually not a reply but an additional question as I am not really too sure how to use this site, so I apologize ahead of time. My question is my mother allowed my daughter to use her Lowes credit card to make a purchase. My daughter was to pay for the item until the balance was paid in full. there was no written agreement, not even an end date that the balance had to be paid as long as she was paying. Here is the situation now....my mother is demanding that my daughter pay the balance in full now and has filed a small claims lawsuit against her for it. What is my daughter's legal responsibility for this and is it possible that she will be told that she is responsible to pay the balance in full when the go to court? Thank you for any help you can give.

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Re: Authorized User Troubles

Postby Vermonster » Wed Nov 04, 2015 7:03 am

pdunncentury21 wrote:This is actually not a reply but an additional question as I am not really too sure how to use this site, so I apologize ahead of time. My question is my mother allowed my daughter to use her Lowes credit card to make a purchase. My daughter was to pay for the item until the balance was paid in full. there was no written agreement, not even an end date that the balance had to be paid as long as she was paying. Here is the situation now....my mother is demanding that my daughter pay the balance in full now and has filed a small claims lawsuit against her for it. What is my daughter's legal responsibility for this and is it possible that she will be told that she is responsible to pay the balance in full when the go to court? Thank you for any help you can give.


That's a doozy. I would say if your daughter is not an authorized user then she has no legal obligation to repay. But small claims courts are a little different. I would say that regardless of the outcome, bridges have been burned. I would be shocked if your mother suddenly changed her mind on her own. Ther is either something that happened leading to the change in opinion, or someone told her something that she might be taking the wrong way. Does she have a financial advisor, or someone that is helping her with paying bills?

My grandmother goes through phases like this where someone will say something like, "wow you have loaned a lot of money to your grandkids, there isn't going to be anything left in your estate." Suddenly she is calling everyone demanding payments.
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Re: Authorized User Troubles

Postby Vattené » Wed Nov 04, 2015 5:04 pm

Even if your daughter was an authorized user, your mother would still be legally responsible for anything charged to the account. An authorized user is just that: someone that has been approved to make purchases on the account. I'm assuming she wasn't an authorized user, but the transaction in dispute was clearly authorized by your mother - so it's not like this was fraud or anything.

I'm afraid I can't be any help when it comes to small claims court. Maybe your mother has legitimate recourse there, but it will be a challenge to prove your daughter agreed to repay if she contests this fact in court. As pointed out elsewhere, even if she is ordered to pay who knows how effectively it could be enforced.
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