Category Archives: Authorized Users

5 ways for authorized users to protect credit

This post originally appeared September 3, 2015 on CreditCards.com as “5 questions every authorized user should ask

By Barry Paperno

Dear Speaking of Credit,
My credit score is bad. I want to be an authorized user on one of my friend’s credit cards. I will not use the new authorized credit card at all. Would my credit score increase with my friend’s credit card usage (purchases/spending)? — G.

Dear G.,
It’s no longer a secret that being added as an authorized user — also known as “piggybacking” on someone’s credit card — can be a good way to boost your own credit score. While initially intended to apply to spouses and significant others who share financial responsibilities, a unique credit-building feature of an authorized user account is that, without taking responsibility for charges on the card, the entire account history is included in the authorized user’s credit file and credit score.

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Is piggybacking on my brother’s credit card kosher? You bet!

This post originally appeared April 2, 2015 on CreditCards.com as “Brother’s got a near-perfect credit score? Go piggybacking

By Barry Paperno

Dear Speaking of Credit,
Hello. I will try to keep this as simple as possible. I have about a 660 credit score and am looking to up the score. What will happen if my brother adds me to his highest-limit credit card (he has about an 820 score). I do not even plan to use his card, he can keep it so I don’t use it. I have a couple of credit cards of my own, I would just like to have his history and high limit added to my account. How will that benefit me? How long will it take? Will it hurt me in any way? And how will that possibly hurt his credit? — Angel

Dear Angel,
You’ve clearly identified one of the two best vehicles, authorized user cards — the other being secured credit cards — for building or rebuilding credit scores. Both can be particularly useful for consumers who, due to a low or no credit score, find themselves unable to obtain the credit needed to establish or re-establish good scores any other way.

Since your questions are directed toward using your brother’s high limit card to help raise your credit score, I’ll limit our discussion to authorized user cards, though you may want to look into how obtaining and properly managing a secured card can also help improve your score.

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What to do if the bank won’t talk to you as an authorized user?

This post originally appeared December 11, 2014, on CreditCards.com as “Authorized users can’t access credit account information

By Barry Paperno

Dear Speaking of Credit,
I am a joint account holder on a Chase credit card account with my wife. Chase reports my credit, but refuses to speak to me about the account. Can they legally do this?  — Chris

Dear Chris,
My guess is that while you probably consider yourself a joint account holder and may very well be the one who uses and participates in managing the account, in the eyes of Chase you are most likely an authorized user, and your wife is the individual card holder.

As an authorized user, you have a card with your name on it, have all of the purchasing capabilities of an individual or joint account holder, and reap the credit scoring benefits of having the entire credit history of the account included in your credit reports and scores. However, you are not considered a primary account holder and don’t share responsibility for any debt incurred on the card.

Of course, including the account’s credit history is only a benefit if that history reflects a low balance and payments that are consistently made on time. Should the history be more on the negative side, a nice perk of being an authorized user and not a primary holder is that at any time you can simply have yourself removed from the account by contacting the card company and have the account eliminated from your credit report and score by disputing it with the credit bureaus.

I say you’re probably an authorized user on the card for two reasons. One, because if you were a true joint account holder, meaning you and your wife are together and individually liable for all charges made on the card, Chase would be required to share all account information with both of you. And secondly, Chase is one of a number of banks that no longer offers jointly held credit card accounts, though they continue to support joint accounts opened before making this policy change a little more than a year ago. Other banks that have stopped opening joint accounts are HSBC and Capital One, while TD Bank and American Express have never offered them.

How do you find out for sure if you are a joint account holder or an authorized user? There are a couple of ways:

  1. Contact Chase, or if they won’t talk to you because you are not a primary cardholder, have your wife make the call, asking if she holds the account jointly or individually with you as an authorized user. If you’ve had the account for a couple of years or more it may turn out that you are, in fact, a joint account holder, in which case the customer service agent who refused to speak with you simply made a mistake.
  2. Obtain your credit report(s) from AnnualCreditReport.com to determine whether the “ECOA code” on the Chase account trade line describes your relationship to the account as joint account holder or authorized user. If you are an authorized user and your wife either holds the account individually or jointly with someone else, that same account will show a different ECOA code on your credit report than on your wife’s. Yours will indicate authorized user status and hers either individual or joint (with someone else) account holder.

Either way, if it does turn out your status is authorized user, don’t fret that Chase won’t talk to you. Instead, take comfort knowing that you are free to apply for your own individually held card from any bank, and that your likelihood of approval will not be diminished by having been an authorized user. Remember that as long as your wife’s account is in good standing, the credit history associated with it has contributed positively to your credit report and score, which could help you land your own individually held card. Then, if you like, you can add your wife as an authorized user on your card.

Have a question or comment?  Let’s hear it!

Authorized user cards: not always a win-win

This post originally appeared October 9, 2014, on CreditCards.com as “The good and the bad of credit account ‘piggybacking’

By Barry Paperno

Dear Speaking of Credit,
What about piggybacking on a nonspouse/family member’s credit account? Can the piggybacker be held responsible for paying the debt on the account? — Kevin

Dear Speaking of Credit,
If a family member is added to a credit card, as an authorized user will it help to build his/her credit, even if he/she does not use the card? — Eli

Dear Kevin and Eli,
Thanks to both of you for your questions, and since they’re similar, I’ll answer them together.

A “piggybacker,” more commonly known as an “authorized user,” is a person permitted to use a credit card by a primary cardholder who maintains responsibility for all debt on the card, regardless of who makes the charges. Authorized users are typically — though not always, as you’ll see — a spouse, partner, child, relative or friend of the primary account holder.

The term “piggybacking” refers to the way in which the entire credit history of an account is not only included in the primary cardholder’s credit report and score, but also becomes part of the authorized user’s report and score. To answer your question, Eli, this happens whether the card is actually used by the authorized user or not.

In recent years, piggybacking has become one of the more popular, and at the same time controversial, ways of building credit for someone who is either new to credit or recovering from financial setbacks. Popular, due to the ease with which an authorized user can be added to an account — no credit requirements — and the immediate scoring benefit that can be realized from the primary cardholder’s (hopefully) positive credit history. Controversial, in that someone who has not used, not managed, or has even misused credit in the past, can reap the scoring benefit of a seasoned and well-managed card without having truly done anything to earn the additional scoring points that can accompany the account. For example, a young person piggybacking on a parent’s long-held and well maintained card can, without having any credit of her own, achieve a very good credit score based on a credit history older than she!

But, the piggybacking picture is not all win-win for authorized users.

Since the card history — good or bad — is included in the authorized user’s credit report and credit score, it behooves the authorized user to make sure the card is always paid on time and maintains low credit utilization (card balance/limit percentage). Otherwise, piggybacking could backfire and result in a worse credit score than you’d have without being an authorized user on the card. In fact, consider this to be just one more of the many good reasons to check your credit reports at least once per year, by going to annualcreditreport.com.

Fortunately, should you discover that the primary account holder is not managing the account to your liking, you can have yourself removed from the account — preferably by having the primary account holder contact the lender — and have it removed from your credit report by disputing it as “not mine” with the credit bureaus.

Perhaps the most controversial aspect of piggybacking in recent years has been the use of this feature to artificially inflate credit scores for profit via a purely business-only relationship in which the piggybacker, often a complete stranger, pays to be added as an authorized user without receiving a card or participating in the managing the account in any way.

In an attempt to head off such piggybacking abuse, the FICO 8 credit score, launched in 2009, initially excluded accounts held as an authorized user from scoring. FICO quickly reversed course, however, and went back to allowing piggybacking in scores — but with an adjustment to generate fewer points for accounts held as an authorized user than as a primary account holder. It had become apparent to FICO that the price for discouraging piggybacking abuse by a relative few would be the denial of honestly-earned credit history for millions of legitimate authorized users — most often the spouses of primary cardholders — who use and manage these accounts no differently than those in the primary role.

So, Kevin and Eli, now that you probably know more about piggybacking than you ever thought you would, you may want to simply consider the authorized user option as an easy-to-implement, minimal-risk way to build or rebuild credit — whether or not you intend to use or help manage the account — and with an easy way out, should the relationship go bad.

Have a question or comment?  Let’s hear it!