It is great to have family members and friends that you love. And most of us like to do favors for those folks when we can help them out. Sometimes, though, relatives or friends may ask a bit more of you than you are comfortable with. For example, what if a loved one asks you if they can “borrow” your credit card? They offer to make payments on them and then you can take the credit card back. In other words, they want to use a line of credit – one in your name – as short-term personal loan. Is it a good idea to come through with this kind of financial assistance for family or friends?
No. Essentially, this person would be asking you to add them as an authorized user on a new line of credit or an existing credit card account. Even if you implicitly trust this person to make payments, it is a dangerous game to open a line of credit and to essentially give someone free reign to do what they want with it. You have to ask yourself why this person does not have their own credit card to use, and what you would do if the worst case happened and they were unable to make payments on the account.
Loved Ones with Bad Credit
Chances are that if someone is asking you to add them as an authorized user on your credit card account that they do not have a good credit score. If they did, they would have no problem opening a new account on their own. Now, what does the bad credit score say about this person? It does not imply that they are irresponsible or that they spend like crazy. It does, however, indicate that they have had problems in the past with lines of credit, and those problems may still be something that your loved one has not sorted out yet.
What if they do not pay?
This is where you could really get into trouble. You have someone who is charging things on the account and they are unable to make the payments. If you are flush with cash at the end of every month and have no problems making the payments for them, then this situation could be okay. However, most of us don’t have unlimited supplies of cash just sitting around and ready to use to help bail someone out of a financial mess.
And that is just what you would end up with if you let someone make purchases on one of your credit card accounts – a big financial mess. Worse than that, you’d also end up with a strained relationship with the person as well. Money can buy a lot of things in this world, but it cannot patch up a strained family relationship or a ruined friendship. If it came down to it, and you didn’t have the money to make payments for an authorized user on your account, you would be the one holding the bag. Your own credit score would take a hit. This would likely drive a wedge between you and your friend/family member. That’s something that you simply don’t want to deal with at any point in time.
Keep this advice in mind, and be prepared to let down these types of requests gently. Explain that you don’t have the resources to pay for another line of credit each month and that you don’t want to add any authorized users to your lines of credit. It may be awkward, but it is better than dealing with a low credit score and a damaged relationship with someone you care about.
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