Editorial Policy

Is being an authorized user holding me back?

Eva Norlyk Smith Ph.D.

September 23, 2013

QHi Eva,

I'm trying to rebuild my credit score and report. I'm on two credit card accounts of my fiance's that have high limits ($15,000), and he hardly uses them. Is this good for my credit?  Or is it hindering it? I'm considering removing myself to improve my score, but I'm unsure from what I've read online whether that will help or not. Thanks! — Carrie

ADear Carrie,

Generally speaking, being added as an authorized user to another person's credit card is a great shortcut to rebuilding credit, so more than likely, you're on the right track.

When your name is added to another person's account, the credit history associated with that account typically also gets reported on your credit report (although some issuers don't report authorized users to the credit bureaus). If that credit history is good, it will impact your credit positively.Ask Eva

This is a practice known as “piggybacking,” and it's particularly useful for those who can't get a credit card of their own because they have a limited credit history.

Of course, being added as an authorized user to an account with a negative credit record can ding your score. So while it sounds like your fiance's credit habits are good (he had to get those high limits somehow), you do need to make sure that this has always been the case for the cards your name is on. Assuming it is, staying on as an authorized user is one of the best things you can do to rebuild your credit.

You say you're concerned that your fiance hardly uses his cards, but as long as he uses each one every couple months or so and makes timely payments, that's perfectly fine. That's enough to keep the cards active (issuers may close cards that remain unused too long) and establish a regular payment history with the credit bureaus. In fact, the less he charges on the cards, the better. Charging far less than your credit limit makes you look like a responsible borrower, so the fact that your fiance seldom uses his cards is probably polishing an already shining credit history.

You also mention that you're considering removing yourself from the cards to improve your score. I'm not sure how bad your score is or how it got that way, but I'm going to suggest you do the following to make sure you get the most benefit from your fiance's credit cards while building credit history of your own.

1. Pull your credit reports. Most card issuers will automatically export the cardholder history to the credit reports of authorized users, but, as I already mentioned, not all do. To find out if the credit cards your name is on show up in your credit history, pull your credit report and look through the list of credit accounts to see if they are there. You are entitled to a free copy of your credit report from each credit bureau once a year. Simply go to AnnualCreditReport.com to pull them. There are three credit reporting agencies, TransUnion, Experian and Equifax, and they sometimes differ in the information they feature, so be sure to get a report from all three. While you're at it, look through the reports to check for errors, and if you find them be sure to correct them. You can submit a request to do via the website of each of the reporting agencies.

2. Get a copy of your FICO scores. There are several different types of credit score formulas, and not all take authorized user information into account when calculating scores. But the leading credit score, the FICO scoring formula, does. So, if you've been an authorized user on your fiance's cards for a while, your FICO scores might already have improved somewhat. While it is possible to get an estimate of your FICO score for free using a free FICO score calculator, your best option is to pay to get your real one, so you're sure it's accurate.

You can get your FICO scores from each of the three credit bureaus for about $20 each. Because you're just checking (and not about to apply for a loan), pulling just one should be fine for now.

3. Learn more about the credit card accounts you're on. To gauge how much benefit you're getting from your fiance's cards, ask him for a few basics, such as how old the accounts are (the older, the better), whether there is any balance on the cards (if the balance is higher than 30 percent of the credit limit, that's no good) and whether there have been any missed payments in the past. Also find out how often he uses the cards.

4.  Apply for a credit card of your own. Once your credit improves, apply for a credit card of your own, so you can begin to build an independent credit history as well. If your FICO score is in the 640 to 700 range, your best bet may be to apply for a card for those with fair credit. If you're turned down, consider a store card, which are often easier to get approved for than regular bank cards. Another option is a secured card. Because secured cards require a cash deposit, issuers are often more forgiving of an imperfect credit history.

Once you have the card, make sure to handle it well: Always pay on time, keep balances below 10 percent of the credit limit and (ideally) pay the balance off in full each month. Once you've established a healthy credit history and credit score with your new card, you can remove yourself from your fiance's if you want to. While TransUnion will no longer report the accounts on your credit report, Equifax and Experian will continue to do so for 10 years (assuming the accounts were in good standing when you removed yourself) or seven years (if the accounts were delinquent).

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