The Quick and Dirty on Authorized Credit Card Users

I have been receiving a lot of emails from folks asking how authorizing another person (usually a friend or relative) on their credit card will affect both party’s credit score. Well, the news is that the folks over at Fair Isaac (they own the algorithm that generates your FICO score in case you don’t know), have decided to take authorized users out of the FICO calculation. I suppose there were a handful of people who were taking advantage of the system.

Basically authorizing another person on your credit card will have no affect on either person’s credit score, which was usually the reason people did it in the first place –in another words, by authorizing a person with bad credit, the payment history would show up on both credit reports while only the primary account holder would be responsible for the payment.

Authorizing someone on your credit card is risky!

I don’t care how much you trust this person, here is what you are doing by authorizing someone else on your credit card:

  1. You are solely responsible for every aspect of the account –including the payment!
  2. With the new FICO changes, the other person will see NO positive changes in regards to their FICO score
  3. If they charge up a huge balance on the credit card, it’s your responsibility to pay it off.

Sign up for a Joint Account instead!

While creditors may look more closely at a credit score when opening a joint account, setting up one of these accounts can be a much safer bet. Plus, both people will see the positive credit score gains!! And, since it’s a joint account, both people are responsible for the payment and both names are on the account.

Get a secured credit card otherwise

If you are unable to get a joint account with another person, I suggest (as I have suggested many times before) signing up for one of these secured credit cards that I have used myself and been very happy with.

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