Create a separate credit identity after divorce

By Sally Herigstad

To Her Credit

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). Ask a question. To Her Credit archive

Dear To Her Credit,
My ex-husband put me on as an authorized user for two of his credit cards. After discovering he has not been paying his balances, I checked my credit report. The credit card companies are reporting me as late on my ex's credit cards.

Can they legally do this, and do I have any recourse? I am not a joint account holder with him -- only an authorized user. -- Paula

Dear Paula,
Yes, they can. But your recourse is simple.

Being an authorized user on a credit card sounds like a win-win deal -- even with an ex-husband. You use the card, but he pays the bill. You are not responsible for the balance. The card is reported on both of your credit histories (although it may or may not affect your credit score, depending on the model), so if the credit card has a long, good history, it may help your credit score. What's the catch?

The catch is this: If the credit card has a not-so-great record, it's still reported on your credit history. That's why you should think twice about accepting an offer to be on someone else's credit card. You have no control over how and when the card is used, yet you share the pain if it's not used and paid responsibly.

For this reason, you should get off these cards. "She needs to remove herself as an authorized user," says Andy Jolls, CEO of VideoCreditScore.com. "If you can get credit on your own, you should not be an authorized user any longer. In her case, she needs to call the credit card companies and have herself removed as an authorized user."

If your ex put you on the cards as a way of paying support to you, there has are better ways to do that. A good old-fashioned check, or one sent by online banking, leaves a much better record. (As a side benefit, he doesn't need to know exactly what you're spending money on that way. Which is arguably none of his business!)

The next thing you need to do is start getting your own cards, if you don't have them already. You might have better luck getting them after your ex's delinquent cards are off your record. It's fairly easy to get started with a store or gasoline card, and then try for a major credit card after a few months. You could even get a secured credit card to start -- that's a card that requires you to have money in an attached account to equal your credit limit. Secured cards are a great way to prove your creditworthiness at no risk to the bank.

You're in complete control now, so now's your chance to keep your credit record flawless. Think of your cards as payment tools, not loans, and pay each balance as soon as you receive the bill.

Don't try to improve your credit by getting lots and lots of cards. It won't help. There's no reason to keep a balance or buy anything you wouldn't otherwise. The best way to build your credit is slowly and steadily, by being one of those boring credit customers who is never late on a payment and never, ever goes over the credit limit.

Remember, your credit score affects not just whether or not you get the next mortgage or credit line you apply for. Your credit score can affect your interest rates and even whether you get a job. You may not ever know that your credit score was the deciding factor in something that affected you profoundly. That's why it's so important that you take action to protect your score -- today.

Create a separate credit identity after divorce

By Sally Herigstad

To Her Credit
To Her Credit, 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).

Ask a question.

To Her Credit archive
Question for the CreditCards.com expert

Dear To Her Credit,
My ex-husband put me on as an authorized user for two of his credit cards. After discovering he has not been paying his balances, I checked my credit report. The credit card companies are reporting me as late on my ex's credit cards.

Can they legally do this, and do I have any recourse? I am not a joint account holder with him -- only an authorized user. -- Paula
Answer for the CreditCards.com expert

Dear Paula,
Yes, they can. But your recourse is simple.

Being an authorized user on a credit card sounds like a win-win deal -- even with an ex-husband. You use the card, but he pays the bill. You are not responsible for the balance. The card is reported on both of your credit histories (although it may or may not affect your credit score, depending on the model), so if the credit card has a long, good history, it may help your credit score. What's the catch?

The catch is this: If the credit card has a not-so-great record, it's still reported on your credit history. That's why you should think twice about accepting an offer to be on someone else's credit card. You have no control over how and when the card is used, yet you share the pain if it's not used and paid responsibly.

For this reason, you should get off these cards. "She needs to remove herself as an authorized user," says Andy Jolls, CEO of VideoCreditScore.com. "If you can get credit on your own, you should not be an authorized user any longer. In her case, she needs to call the credit card companies and have herself removed as an authorized user."

If your ex put you on the cards as a way of paying support to you, there has are better ways to do that. A good old-fashioned check, or one sent by online banking, leaves a much better record. (As a side benefit, he doesn't need to know exactly what you're spending money on that way. Which is arguably none of his business!)

The next thing you need to do is start getting your own cards, if you don't have them already. You might have better luck getting them after your ex's delinquent cards are off your record. It's fairly easy to get started with a store or gasoline card, and then try for a major credit card after a few months. You could even get a secured credit card to start -- that's a card that requires you to have money in an attached account to equal your credit limit. Secured cards are a great way to prove your creditworthiness at no risk to the bank.

You're in complete control now, so now's your chance to keep your credit record flawless. Think of your cards as payment tools, not loans, and pay each balance as soon as you receive the bill.

Don't try to improve your credit by getting lots and lots of cards. It won't help. There's no reason to keep a balance or buy anything you wouldn't otherwise. The best way to build your credit is slowly and steadily, by being one of those boring credit customers who is never late on a payment and never, ever goes over the credit limit.

Remember, your credit score affects not just whether or not you get the next mortgage or credit line you apply for. Your credit score can affect your interest rates and even whether you get a job. You may not ever know that your credit score was the deciding factor in something that affected you profoundly. That's why it's so important that you take action to protect your score -- today.

Consumers cash in on credit card scam

By Cara Henis

Defrauded consumers got some cash back from the Federal Trade Commission earlier this month.

On July 15, the FTC mailed refund checks of about $200 to customers who were allegedly promised a credit card that worked like a Visa or MasterCard. The cards were marketed at people with bad credit, who were told that the cards could be used anywhere, according to previous reports.

The Florida-based company, Integrity Financial Enterprises, charged an upfront fee of $200 to $300 for the cards, supposedly telling consumers that they'd receive a reimbursement. However, the cards were only functional if used when buying from a catalog or Web site owned by the company and refunds were never issued. Those who tried to cancel were charged termination fees.

The FTC sued Integrity Enterprises, its owner Robert James Fischbach, and the other companies owned and used by Fischbach to market the cards -- Infinite Financial and National Benefit Exchange -- during a telemarketing fraud sweep in 2008.

The sweep, "Operation Tele-PHONEY," uncovered 12 other cases of fraud, which affected more than 500,000 people and resulted in more than $100 million in losses, according to an FTC press release.

The FTC settled its complaint with Fischbach in December 2008. Fischbach has since been prohibited from falsely representing his cards or business in the future and was sanctioned with a monetary fine of $2.4 million. Fischbach and the companies also had to relinquish all financial assets to the FTC.

The FTC is using these assets to repay consumers who fell victim to the scam.

Only 70 customers filed for a redress to receive monetary compensation, according to an FTC spokesman.

It is unclear as to how many people were affected by Fischbach's fraudulent cards.