Protect credit when being dropped as authorized user
By Erica Sandberg
December 31, 2015
I am an authorized user on my dad’s card and he wants to close it in a few months. Will my perfect credit disappear? For two years he paid the bill with the money I earned and gave him. I don’t think he ever even used this card. Am I screwed? Can I take this card over as my own? What should I do now? — Dean
Just as a guest can be kicked out of a home any time the owner chooses, an authorized user on someone else’s credit card can be given the boot. This is a real problem for the authorized user, but that’s the breaks. Your dad has all the power, so he gets to call the shots.
While the two of you have been sharing the charging rights, the account has been appearing on your consumer credit reports as well as your dad’s. The great news is that this account has been kept in good standing because of your perfect payments. Piggybacking on your father’s card has definitely caused your credit rating (as well as your dad’s) to increase.
However, when the account is closed (or if your dad simply decides to revoke your charging privileges), it will no longer show up on your reports and you’ll be back to where you started. My suggestion is to apply for your own credit card immediately, while the account is still active.
To get started getting your own card, find out what your FICO scores are right now, and apply for the card that looks the best and that fits within your scoring range. Scores go from a low of 300 to a high of 850. People with credit scores over 750 are considered extremely low risk. As long as you have a steady job and your FICO scores are in this “best” range, you’ll have plenty of cards to choose from. Review all the cards in your scoring category and apply for the one that best suits you.
When you do have an account only in your name, you can start to build your own credit history. You already know how to charge responsibly because you’ve been practicing with your dad’s account. Now just continue the fine work.
You didn’t specify why your dad is closing the account, but he may have a very good reason. Thank him for the opportunity to learn how to use credit effectively. He put his credit rating at risk when he took you on as a guest because if you did go overboard and charge too much, he would have been liable. Essentially, he gave you valuable training wheels to teach you how to handle credit like a pro. Most people make expensive mistakes in the beginning (such as skipping a payment cycle or two or charging to the max right away and then having to delete a balance swollen with interest), but now you can start as an experienced card user!
Soon you’ll be on your own. That’s exciting! Here’s what you need to do to keep building a solid credit history: Pay on time, and pay the whole bill every time. Check your credit reports annually to make sure the account is being reported accurately, and when the time is right, add another account or loan. Do this and you’ll really hike your credit score, making you eligible for the premium products. Think cheap loans and plum travel rewards — these will be yours if you keep managing your credit responsibly.
Got a question for Erica? Send her an email.