Today’s blog is going to focus on authorized users of credit cards. Specifically, we’ll go over whether credit unions are required to do any credit reporting on authorized users.
Jumping right into it, under Regulation B, if the authorized user is a spouse, a credit union would be required to report on the authorized user (discussed below). However, for other authorized users (non-spouses), it does not appear that reporting is required. Section 1002.10 provides the following:
“(a) Designation of accounts. A creditor that furnishes credit information shall designate:
(1) Any new account to reflect the participation of both spouses if the applicant’s spouse is permitted to use or is contractually liable on the account (other than as a guarantor, surety, endorser, or similar party); and
(2) Any existing account to reflect such participation, within 90 days after receiving a written request to do so from one of the spouses.
(b) Routine reports to consumer reporting agency. If a creditor furnishes credit information to a consumer reporting agency concerning an account designated to reflect the participation of both spouses, the creditor shall furnish the information in a manner that will enable the agency to provide access to the information in the name of each spouse.
(c) Reporting in response to inquiry. If a creditor furnishes credit information in response to an inquiry, concerning an account designated to reflect the participation of both spouses, the creditor shall furnish the information in the name of the spouse about whom the information is requested.” (Emphasis added).
As noted above, creditors that furnish credit information are required to report the participation of both spouses, “if the applicant’s spouse is permitted to use or is contractually liable on the account.”
Additionally, here is the commentary which goes into additional details and allows credit unions to report on all authorized users (if they so choose):
“Section 1002.10—Furnishing of Credit Information
- Scope. The requirements of §1002.10 for designating and reporting credit information apply only to consumer credit transactions. Moreover, they apply only to creditors that opt to furnish credit information to credit bureaus or to other creditors; there is no requirement that a creditor furnish credit information on its accounts.
- Reporting on all accounts. The requirements of §1002.10 apply only to accounts held or used by spouses. However, a creditor has the option to designate all joint accounts (or all accounts with an authorized user) to reflect the participation of both parties, whether or not the accounts are held by persons married to each other.
- Designating accounts. In designating accounts and reporting credit information, a creditor need not distinguish between accounts on which the spouse is an authorized user and accounts on which the spouse is a contractually liable party.
- File and index systems. The regulation does not require the creation or maintenance of separate files in the name of each participant on a joint or user account, or require any other particular system of recordkeeping or indexing. It requires only that a creditor be able to report information in the name of each spouse on accounts covered by §1002.10. Thus, if a creditor receives a credit inquiry about the wife, it should be able to locate her credit file without asking the husband’s name.” (Emphasis added).
That being said, the card networks (such as Mastercard or Visa) may have their own rules regarding reporting on authorized users who are not spouses, so credit unions may also want to check those rules or reach out to their card network representative(s).
Additionally, credit unions may want to review their agreements with their credit reporting agency (CRA) to determine what they are required to report. For more information, credit unions may want to consult with their CRA representative(s).