Has it ever crossed your mind whether having additional users can affect your credit score? We have to know that a lot of credit card holders would rather add their family members and partners in their account for convenience and to get better chances for earning higher points. When searching for the best travel credit cards, they usually check the feature that allows the addition of other family members as authorized users.
So if you are among the credit card holders who would rather have all his or her family members use a single credit card, then it would help your decision-making to know the pros and cons of doing this to your credit score.
Illegitimate authorized users will no longer be included in credit monitoring
It has come to the attention of FICO that some credit repair service providers actually take advantage of people by offering credit score improvement that consequentially compromises those with positive credit accounts. Because of this, FICO has made a ruling that they will no longer include the authorized users in the calculation of FICO scores.
However, that same ruling has been reversed the following year because some of the authorized users who wanted to establish a good credit score were negatively affected by the ruling. There is now a new model called the FICO 08 that effectively excludes the illegitimate users in the calculation of credit scores. The new model now provides a way for those who are legitimate authorized users to establish their credit standing and benefit from being linked to reputable credit holders.
As always, you have to know that most banking institutions would not let you know how they use the FICO 08. Thus, it would still be very hard to qualify the effect of being a legitimate authorized user of a particular credit card account.
There is no hard credit pull when you have authorized users
If you are only an authorized user of another account holder, then expect that it would not generate a hard credit pull. The credit line will only be reflected on the credit report.
Being an authorized user does not require you to make payments
If you are merely an authorized user of a particular credit account, then that does not make you accountable for the payment of account balances. The credit card issuers only put the accountability to the real credit card holder and also the joint user. So if you are not a joint user, then you shall have no worries about paying for the outstanding balances.
There are both advantages and disadvantages to being an authorized user of a credit card
Just as any other thing on this earth, there are always pros and cons. If you are a legitimate authorized user of a particular credit card account, then you will surely be reaping the rewards of the holder if he or she has a good credit history and payment behavior. In order to ascertain that you are benefitted from this arrangement, you will need to have your own credit card which is under the account of your spouse or partner. That means that your credit card must bear your name on it yet with the main account under your spouse. Also, the bank must also be provided with your social security details so that your credit information can be tracked and recorded accordingly.
The Advantages Of Being An Authorized Credit Card User
- You could help your partner reach the minimum spend.
- There is only an additional 25 USD amount for every authorized user of the AMEX.
- You could have your own credit score established and even improve the score of the primary card holder.
The Disadvantages Of Being An Authorized Credit Card User
- If ever strife occurs between you and the primary credit card holder, then you could be shoulder the charges that were incurred using your account.
- Your credit score could be negatively affected if you or the primary holder fails to pay on time.
- If you have plenty of authorized users, then AMEX can conduct investigations of your credit standing and financial history.