Authorized user card could help your score in different ways

This post originally appeared October 26, 2017 on CreditCards.com as “‘Will adding myself as authorized user to spouse’s card boost my score?

By Barry Paperno

Dear Speaking of Credit,
I just read your article “How average credit account age affects your FICO score,” which I found to be very informative and beneficial.

I have had only one credit card (American Express) since 2001, but noticed that some critical institutions, such as the Social Security Administration, asks users to supply Visa, Mastercard or Discover for the enhanced security features on its website.

If I became an authorized user on my spouse’s Visa card, would they use her start date for calculating my new average age, or would it be as of the date I was added as an authorized user? Thanks for your response. – Dex

Dear Dex,
As more consumers have come to know, an authorized user is someone who has been given permission to use a card account by the primary cardholder.

The authorized user is not responsible to the lender for any debt on the card – even debt incurred by the authorized user. Just as they do for primary users, card companies will report a card held as an authorized user to the credit bureaus in that user’s name, where it will be included in that person’s FICO credit score. (I’ll note VantageScore differences later.)

To your question, most card companies report the original card open date for the authorized user as well as primary users. Beware, however, that some companies, such as Discover, might instead use the date the authorized user was added to the account as the open date.

To be on the safe side, you may want to contact the issuer of your spouse’s Visa card for its policy on reporting open dates for authorized users.

Because a credit card’s open date is used to measure such credit longevity-related calculations as average account age and the ages of your newest and oldest accounts, older open dates can lead to more score points for the authorized user. And by “older” in this instance, we mean the account being added was opened before the oldest existing open date on your credit report.

Yet even if your spouse’s Visa card is not old enough to add points to your score in this way, along with the benefit of having a card more widely accepted than American Express, there are other ways adding this card to your credit report could help your FICO score.

Payment history
If there are any late payments in your American Express card’s history, adding an authorized user card with a spotless payment record can add credit score points by raising your ratio of good-to-bad accounts.

Credit utilization
Adding the authorized user card’s balance and credit limit to the calculations measuring how much available revolving credit you’re using (balance/limit ratio) can help raise your score if your total combined credit utilization drops when your spouse’s card is added.

Credit mix
While generally less important to your score than payment history and utilization, a credit file containing both major types of credit – revolving (credit cards) and installment (loans) – can deliver a few more points than when only one type is present. If your American Express card is of the charge – not credit – card variety, adding this revolving account could help your score in the credit mix department.

FICO 8, FICO 9
For authorized users with “thin” credit files – only one or a few accounts – there can be another concern when anticipating the scoring impact of adding an authorized user card.

The latest FICO score versions, FICO 8 and FICO 9, may give an authorized user trade line less weight when added to a thin file than a card held as a primary user.

This feature was established about 10 years ago by FICO to discourage consumers with little or poor credit history from using authorized user accounts solely for credit repair purposes.

VantageScore 3.0
So far we’ve concerned ourselves only with the scoring models provided by FICO, the score used most often by lenders. There is another major company, VantageScore, created by the three major credit bureaus (Equifax, Experian and TransUnion), providing scores to lenders, though to a lesser degree.

Whereas a FICO score includes both positive and negative authorized user account information, VantageScore 3.0, the latest and most used version, ignores negative information found on an authorized user account.

An alternative
What if instead of using the original open date you learn that your spouse’s Visa card issuer uses the date the authorized user was added as the open date?

Or perhaps you have a stellar credit history on your American Express card and there has been a recent late payment or two on your spouse’s card?

In either case, you may want to rethink adding your name to spouse’s Visa. Instead, consider applying for your own secured or unsecured Visa or Mastercard.

While not necessarily helping your credit score in the short run – though it easily could over time – you will achieve your objective of having a card accepted virtually anywhere while keeping your credit report looking clean.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s