This post originally appeared July 6, 2017 on CreditCards.com as “‘Q&A: Does being an authorized user on too many cards hurt my score?”
By Barry Paperno
Dear Speaking of Credit,
When someone adds you to their card as an authorized user and you already have your own line of credit, will taking yourself off of their cards hurt your credit score? He has good credit, but it makes me look like I have way too many credit cards. – Gail
This could be a tough call. If you’re not careful, removing your name from any of those authorized user cards, which then removes them from your credit report, could just as easily have your score heading south as north.
Which way it turns out to be will depend on whether those authorized user cards are currently helping or hurting your score. The trick then is knowing which scoring calculations are likely to be affected by their removal from your credit report, and how.
What follows will be some tips on how to know if those authorized user cards are a plus or a minus for your score currently – and what to do once you know.
Number of cards is a minor scoring factor
Let’s start by eliminating what appears to be your primary concern from this equation – too many credit cards. While having too many or too few cards can make the difference of a few points in some situations, for most consumers it’s a relatively unimportant factor having little, if any, scoring impact.
We’ll now look at how just a handful of factors within the top three credit scoring categories – 80 percent of your score – can help determine whether you’re better off keeping or dumping an authorized user card for the sake of your score:
1. Payment history (35 percent of your score). Understanding how the payment history of an authorized user card might affect your score isn’t always easy, since impacts can vary across the big three credit bureaus – Equifax, Experian and TransUnion – and from one credit scoring model to the next. Keeping things simple, however, you’ll err on the side of caution by expecting the payment history of an authorized user card to affect your score just as if the account were in your name.
- Keep. If your own cards have incurred more late payments or any other negative history than your authorized user cards, keep those authorized user cards, as your score might miss their positive influence when they’re gone.
- Dump. If any of your authorized user cards have a history of late payments – recent ones, especially – and your own record is clean, or at least cleaner, removing yourself as an authorized user could be the right score-raising step.
2. Amounts owed (30 percent of your score). Second only to how timely you pay, the amount you owe on cards can seriously send your credit score up or down according to the credit utilization percentages (balance/credit limit) that reveal how much credit you’re using. Lower utilization percentages are best, with the ideal proportion ranging between 1 and 9 percent.
- Keep. Should your combined utilization (all balances/all credit limits) go higher (worse) when an authorized user card is eliminated from the calculation, consider that card a plus you won’t want to part with.
- Dump. If your combined credit utilization drops when an authorized user card is taken out of the equation, removing your name from it could help your score.3. Length of credit history (15 percent of your score). Though not quite as influential as the above two categories, this one evaluates how long you’ve been using credit and how recently you’ve obtained new credit by making use of authorized user account open dates as well as those of your own cards and loans. With these factors that include average account age, and the length of time since the newest and oldest account openings, older is always better.
- Keep. Any drop in these age-related numbers when authorized user cards are excluded could be an indication that holding on to them will work in your score’s favor.
- Dump. Conversely, if any such length of history measurements increase when your authorized user cards are left out, removing them could add points to your score.
The takeaway here is that, for your score’s sake, only remove your name from authorized user cards once you’ve gone through the above exercises and found them most likely to be keepers.
Fortunately, and not always the case with credit reports and scores, the decision to keep or dump is all yours.