BLUF: does being an authorized user on a credit card effect your credit rating?
So right after my divorce (before and during too) my finances were in tatters. I’ve done a pretty good job of repairing a lot of the damage. My credit score is decent considering my situation but I would like to improve it. When I got my credit score one of the recomendations is to raise the credit limit on my credit cards. I have zero credit card debt which is good but apparently the couple of small credit cards I do have don’t have enough of a credit limit. I am now living with my girlfriend. She suggested I become an authorized user on her credit card. It has a large credit limit and is paid off right away (good for air miles too). I’m not sure if being an authorized user will effect my credit rating at all. So will being an authorized user effect my credit score?
As long as this question is answered I have no problem with other suggestions. But at this point this seems to be the only thing I have any control over. The other stuff that will raise my score is pretty much waiting until some bad stuff gets old enough to get rid of.
This says that it will count on your credit score but it doesn’t say how much it will help or hurt. I suspect the effect is not as great as having a higher limit on your own.
I would suggest joining Credit Karma. It is an awesome, free, and complete legit set of tools to monitor your credit score at a detailed level and tell you how you can improve yours specifically (I am not associated with them, I have just used it for as long as it has been available and have found it to be a great help). I would suggest applying for a card with no annual fee and a higher credit limit. Credit Karma will give you a list of ones that you would likely qualify for given your current situation.
Please do. I suggest that to everyone. Credit reporting and scoring is a little mysterious except for obvious things like late payments and bankruptcies. Credit Karma does a great job of breaking the factors that go into yours down and giving you ways to do something about it. I learned how to raise mine at will using it and I went from good to excellent credit in just a few months. I can qualify for just about anything now. It can also show you roughly what effect different actions on your part like applying for a new credit card will have. Lots of things effect your credit score but some of those are very minor and/or temporary and that is important to know on both the positive and negative side. It is also the only way you can see your credit score (Transunion and Vantage plus some others) by week and charted for free.
I’m no financial wizard, in an expensive suit, but I have recovered my credit from the ruins of a divorce. Zero credit card debt is your friend!! Nevermind credit limits for now. Buy some things with credit that you could have paid cash for, and pay the bill in full. Before you know it, Amex will be sending hookers and blo…, (ahem), credit offers with higher limits. Nevermind the higher limits. Remind yourself that you have (trumpets, please) No Credit Card Debt!
I should have mentioned that too because it is largely true. Your credit score only benefits when you actually use the credit and pay it off. The absolute amounts don’t matter nearly as much as you think they would. Put $10 or $20 on the cards you have a month and then just pay them off. Your score will go up over time and will be quite good once the negative marks drop off.
I should also mention credit scores generally only include things that are true credit accounts. You can pay your utility bills and other types of non-credit bills religiously for your whole life and still have a bad credit score because those types of things aren’t counted on the positive side at all (and only in the negative if they go to collections). Your credit scores will only improve if you are actively using things like credit cards or paying off loans.
My business partner and I did this a while ago. I made him an authorized user on one of my credit cards and it did in fact improve his credit score.
He actually used it himself and paid off all the balance, but that fact was unknown to the CC company. It could have been me doing it and it would have had the same outcome.
It does come down to how your credit card bank reports, though. You should call and ask. I called and asked mine before I did this and they were able to confirm.
One thing that I would mention is not to cancel your oldest credit card, even if you don’t need it, or if it has a low limit. One factor in your score is average length of credit, so obviously keeping your oldest card helps here. Also, in general, you don’t want to cancel cards when buildign your score - just don’t use them. This is because another measure is the ratio of debt to available credit, so the more credit available, the better your score will be. The counterpoint to this is once you start to get inot decent credit score land, you need to consider your average credit limit - this plays a role not only in the score itself but also in the limits that will be offered when you get new credit cards.
So, in summary, keep your oldest card and don’t cancel other cards until your at least north of 630-650, then cancel those with the lowest limits to try to raise your average limit w/o hurting your average age too much.
A mortgage will actually increase your credit core most of the time, but having a high amount of installment payments can be negative (especially in relation to income - again, this part has impacts outside of the score itself). Having a high number of installment payments can also lower your score, so consolidating student loans can be helpful.
Finally, the types of credit you have can have an impact as well - in general, ‘bank’ credit cards are viewed more favorably than ‘store’ credit cards (even though they are typically financed by banks).
Veering away from GQ territory but I do understand your concern. We of course believe that we will be together forever but I’m no kid and I know things change. However, since I moved into her house and she makes a considerable amount more than me I think she has more to worry about on that front than I do.
Another credit report question. Looking at my most recent three company report I see a couple of wrong addresses on there. They are places my ex lived at but I never spent a day there. Is it worth it to get those addresses off my reports? Does it matter at all?
Maybe not but if you want a quick fix, that is a good segue into one. You have the right to dispute anything currently on your credit report that shows as a negative or a potential negative. Your creditors have to confirm all the details within a certain time or it drops off of your report forever. There is nothing illegal about calling all of the three major credit reporting agencies and disputing every negative entry on your credit report especially armed with the fact that you have addresses you never lived at on the report. It may or may not work but the chances are good that at least some of them will be taken off your record immediately and never put back on.
My credit report had entries from relatives that you never want to be financially associated with when I was younger and first applied for a mortgage. I called each of the agencies and explained the situation and they put me through to an agent that could fix the situation. It was so messed up that there were a lot of deletions but I immediately realized that I could have anything deleted that I wanted whether it was mine or not. Viola! I went from crappy credit to perfect in three phone calls. You have to use your moral judgement to see if you want to use that technique but it legal, it can work well, and there is no downside to you other than some time on the phone.
I’m just curious, the Credit Karma link you posted looks legit, and you’ve been here for a while so I know you’re not a spammer, but when I run across something that seems too good to be true, it usually is. And this site is pinging my “too good to be true” meter. What’s the catch?
There isn’t one in this case. They make money from the financial services industry for things like suggesting certain credit cards or mortgage refinancing options tailored to your needs and credit score. You don’t have to do have to do anything however although many of the suggestions are good ideas anyway. I have been using it ever since it was in beta testing and it works exactly as promised.
There’s also credit.com and quizzle. They all give basically the same info but their scores can vary by as much as 50 points. IME Credit Karma is usually the closest to my actual FICO score, but each site has its own useful tools/insights.
Being an authorized user generally does not make one liable for the debt. The usual situation is a parent authorizing their kid to use their card, e.g. for college books and [del]booze[/del] study materials.
There used to be a popular scheme whereby people with stellar credit would “rent” their reputation to somebody who needed a credit boost by adding that person as an authorized user on their cards. The AU would benefit from the excellent credit history of the other guy’s card.
The reporting bureaus got wise to this several years ago and no longer count history towards the creditworthiness of an authorized user. It will still count as far as utilization ratios go.