Adding Credit Card Authorized Users: How It Affects Credit History

Adding someone as an authorized user on a credit card can significantly impact their credit history, especially if the account has a positive payment history and low credit utilization. However, it's important to note that if the primary account holder misses payments or accumulates high balances, it can negatively affect the authorized user's credit as well.

Positive Impacts of Being an Authorized User

When someone is added as an authorized user, their credit report can reflect the payment history and credit utilization of the primary account holder. This information is reported to credit bureaus, which can improve the authorized user's credit score if the account has a positive payment history and low utilization. For instance, if the primary account holder consistently pays on time and keeps their credit utilization below 30% of the limit, the authorized user can benefit from this positive information.

Negative Impacts to Consider

However, there are potential downsides to being an authorized user. If the primary account holder fails to make payments or carries a high balance, the authorized user's credit can also suffer. Therefore, it is crucial to choose a credit card account with a good credit history when adding someone as an authorized user. Additionally, the impact of an authorized user on a credit score depends on the specifics of the credit card account, such as payment history and credit utilization.

How It Affects Your Credit Score

The impact of being an authorized user on your credit score can be complex. It can either increase or decrease your score depending on the details of your credit accounts. For instance, if the account has late payments, high utilization, or a lower average age compared to your existing accounts, it can negatively impact your score. However, if the account has positive payment history and low utilization, it can also improve your score.

Current Practices of Credit Bureaus

Each credit bureau handles authorized user accounts differently. Experian, for example, lists one or two authorized user accounts but typically does not list more than a few. Other bureaus usually require a name and address match before listing an authorized user trade line. The decision on whether to consider authorized user accounts is ultimately up to the credit bureaus. As of the latest FICO scoring products, authorized user accounts are not typically considered; however, different bureaus may have different policies.

Can Adding a Weak Profile Help?

Adding someone with a weak credit profile as an authorized user can still be beneficial if the payments are always on time and the usage is kept below 10% of the credit limit. This can help in lowering the overall utilization on the weaker profile and adding positive payment history. However, if a payment is missed or the credit utilization spikes, both the primary account holder and the authorized user can suffer. In this scenario, the weaker profile may lose any potential benefits they were trying to achieve.

Conclusion

The decision to add someone as an authorized user on a credit card should be made carefully. While it can enhance the credit history and increase the credit score, it can also potentially lead to negative consequences if not managed properly. It's crucial to understand how authorized user accounts are handled by different credit bureaus and to ensure that the primary account holder maintains a strong credit history.

Keywords: authorized user, credit history, credit score