Since thousands who thought their jobs and income were secure are now facing long-term unemployment, it follows that thousands who never expected credit problems are now in trouble.

With savings depleted, many are unable to pay the monthly minimums on their credit cards and those cards may eventually go into default – causing credit scores to tumble and leading to lawsuits for collection.

What does that have to do with your children?

It affects them if at some time you added them as authorized users on your credit card or cards.

Don’t panic – they aren’t responsible for your debts unless they were co-applicants.

But the “piggyback  rule” that allowed your good credit to help them establish their own credit scores can now work against them. The activity on your credit card and your credit report will be reported under their names as well as yours – and when that activity is negative, your credit woes will lower their credit scores.

If you think you’re headed for default on your credit cards, the first thing to do is contact your credit card issuers and have your children’s names removed. In fact, if your spouse was not a co-applicant, have his or her name removed at the same time.

If you’ve already been late, they may not be willing to help you, so do this as soon as you see trouble on the horizon.

Next, your children should get copies of their own free online credit reports and see if your troubled accounts are listed. If so, they can contact the credit bureaus and challenge the debt. They’ll need to submit paperwork verifying that they are not the responsible parties on those accounts.

Aside from hurting their credit scores, the real trouble for your kids can come if your account is sold to a third party. All they’ll see is the names, not the status. So they could sue your children as well as you. Even if they saw the status, they might not care. Some of these 3^rd party collection agencies are vicious. In fact, the tactics they use are such that you and your kids could receive a notice of judgment before even knowing you’d been sued.

If your children are sued you will have a good defense. But you’ll still have to pay for an attorney and your kids will still go through a hassle.

Author: Mike Clover

CreditScoreQuick.com your resource for credit cards, credit reports and Credit News…..

This entry was posted on Monday, May 3rd, 2010 at 8:40 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.