I recognize credit scoring can be complicated and sometimes people can make mistakes when covering the topic or otherwise answering consumer questions. Having said that, one of the lesser complicated aspects of credit scoring is the value of becoming an authorized user on the credit card of another person, thus getting the value of the card’s age, low utilization and on time payment history.
I expect everyone, not almost everyone, to get that one correct when they’re asked the question. I’m not going to “out” him but perhaps the biggest name in personal finance missed it big time in a recent consumer Q&A session by stating “Authorized Users Don’t Help Your Credit Scores.”Whooosh, swing and a miss. Authorized user accounts absolutely can help your credit scores. In fact, becoming an authorized user is perhaps the most common method for young people to build credit. And, it’s a valid strategy to rebuild credit after some sort of credit related disaster. FICO testified in front of the U.S House of Representatives that their scores have always considered authorized user accounts, so the argument should end right there.
So, if you a young person trying to establish credit for the first time or you’re an adult who is looking for way to rebuild your credit reports and credit scores rest assured that the authorized user strategy still works. Be aware, however, that FICO is smart enough to have built login in their newer scoring systems that attempts to sniff out illegitimate use of the authorized strategy. If you’re trying to “rent” tradelines or “piggyback” by having your name added to a credit card of a complete stranger then A) you’re probably committing bank fraud if you take out new loans and B) FICO’s scoring system may discount the value of that card in your score.
Play by the rules people!
Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.