Lets say that six months ago you had no credit whatsoever. Knowing that you needed to build a credit rating, you asked your friend to add you onto his credit card as an authorized user. The credit card company then began reporting his credit card history in your name as well as his. This established a credit report for you. Although the authorized user account didn't contribute to your credit score (it only does so if the authorized user is an immediate family member, such as a parent or spouse) it did create a stable credit history.
Fastforward three months and your best friend loses his job. He's using his credit card to make ends meet but eventually succumbs to the financial pressure and defaults on the card. The collection calls commence...and guess who they're calling?
They've called him, of course, but he has no job and no assets. You, on the other hand, are finally doing well for yourself and have a bit of extra money to tuck away each month. Now the collection agency is threatening you with bad credit and – could it be? – a lawsuit if you don't pony up the cash to cover your friend's defaulted credit card bill.
But know this: Authorized users are not legally responsible for credit card debt the primary card holder incurs. Too many consumers are frightened by calls from bill collectors over debts they aren't even liable for. Don't let it happen to you. Send the collection agency a written notice informing the company that you are merely an authorized user on the account and, as such, are not responsible for the debt. Note that the company is violating the Fair Debt Collection Practices Act by informing you, a third party, of the primary account holder's debt. Demand that the collection agency never contact you again.
And if you haven't already, contact the credit card company and remove your status as an authorized user. The longer the account remains on your credit report, the worse the situation becomes.