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Authorized User Accounts Ignored in Credit Scores

What happens when you add an authorized user to your credit card account?

By
Elizabeth Carlassare
4-minute read
Episode #33

Today’s topic is understanding whether adding an authorized user to your credit card will hurt your credit?

Kabria e-mailed me with this question:

I have good credit and my boyfriend has bad credit. If I make him an authorized user on one of my credit cards will it damage my credit score?

Thanks for the question, Kabria.

In the U.S., people with little credit history or a poor credit history sometimes try to solve the problem by having a spouse, significant other, or parent with good credit add them as an “authorized user” on their credit card. For example, let’s say that you want to help your son establish his credit history. You could add him to your credit card as an authorized user. Many credit card companies report the payment history on both the primary cardholder’s and the authorized user’s credit reports. So the authorized user who wants to establish or improve their credit benefits if the credit card company reports the good payment history on their credit report.

What are Authorized Credit Card User Accounts?

So what is an “authorized user”? An authorized user can use the credit card, but is not responsible for making the payments. An authorized user is not the same as a “joint account” holder because a joint account holder is responsible for payments.

As long as the payments are made on time, adding someone as an authorized user to one of your credit cards shouldn’t negatively impact your credit score. But there are some really important things to consider before adding someone as an authorized user.

Should You Add an Authorized User?

First, ask yourself why you want to add the person as an authorized user. Does allowing the person to buy stuff with your credit card without any responsibility for paying for it make any sense? In many situations it doesn’t.

Second, adding someone as an authorized user to your credit card creates risk for both of you. For example, if you were to make late payments on the card, the information would likely appear on the authorized user’s credit report, as well as yours. And, if the authorized user were to make purchases you couldn’t afford, you’d be solely responsible for the payments.

Third, if you’re thinking about adding a friend or family member as an authorized user to help boost their credit score, know that this technique is going to disappear soon! Fair Isaac is about to change the FICO scoring model to ignore authorized user accounts when calculating credit scores. The scoring change is intended to stop credit repair companies from abusing this method. Some companies actually charge people with poor credit a fee to be added as an authorized user to a stranger’s credit card with a good payment history. And the stranger gets paid for allowing authorized users on their card.

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