Mortgage loans, credit cards, insurance premiums, auto loans, student loans, employment; most people know what role credit reports play in our everyday lives.
But, most of us only believe that credit reports are used for determining the risk to a lender of doing business with us.
Credit reports have also found their way into our legal system, as I learned a few weeks ago.
Now Here’s a First
For this first time in my 21 years in the credit world I have found a new use for credit report data…divorce proceedings and alimony consideration.
I found myself testifying on behalf of an ex-spouse who had been ordered by the court to pay a very large sum of money each month to his ex-wife for alimony.
Her argument was that without the large amount that she would be unable to buy things like clothes and other things normally purchased with a credit card.
She claimed to have no access to credit and because her credit report was polluted with negative information she would be unable to get any new access to credit.
The Hole in the Argument
The hole in her argument was this…her credit reports suggested that she not only had access to credit cards but that it was a considerable amount, $50,000.
She had been added as an authorized user on her new boyfriend’s credit cards. When you add up the total amount of available credit, that’s where you get the $50,000 in available lines.
Credit card accounts are commonly reported to the authorized user’s credit reports.
And while the authorized user has no liability for payment of the debt incurred on the card, they do have the same charging rights as the primary credit card holder.
So, if the card has a $10,000 credit limit, the authorized user has access to $10,000, or less depending on the current balance on the card.
That’s Not the Only Issue
There’s also another lesser-known issue that popped up in the case.
When you are added to a credit account and that lender reports that account to your credit reports, the billing address associated with the account will also show up on your credit reports.
So, now not only did the Defendant have credit card accounts on her credit reports but she also had her new boyfriend’s address showing up on her credit reports.
At that point it wasn’t hard to start adding things up.
The address on her credit report was actually the address of her new boyfriend. And, the reason that address showed up on her credit report is because she had been added to the account.
Case closed, right?
If I’ve learned anything in my time as an expert witness it’s that the case is never cut and dried. This was no exception.
On cross examination (where the ex-wife’s attorney questions me) I was asked if I could identify any charges made by the ex-wife on the cards where she had been added as an authorized user.
The answer to the question is no, I could not testify definitely that she actually used the card for any purchases. But that’s kind of a trick question because credit reports don’t maintain that level of detail on credit cards.
That level of detail is something you’d find on your credit card statement where you can see spending activity sorted by each credit card connected to an account.
Regardless, that wasn’t the core issue that brought me to Superior Court that day. I was simply being asked to testify as to whether or not someone had access to credit or if they really were “credit-less.”
Credit reports don’t generally lie and they didn’t in this case.
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. Follow John on Twitter.