Edited August 2008 to reflect an important new change: FICO will be including authorized users in their scoring again. They say they’ve found a way to distinguish between the legitimate and illegitimate users. More information can be found here. I’m leaving this on the site, however, to reflect the history of the FICO score.
I just had someone ask me whether being an authorized user on a card will give you a credit history, so I thought it might be worth a quick post. This is a good question because the answer used to be yes.
Lots of parents would simply add their kids as authorized users on their credit cards and the kid would get a defacto credit history and score. If you read Suze Orman’s books from even a couple years back, she advises this (if you have a good credit score).
But the rules have changed. It’s probably because the Fair Isaac group thought it wasn’t really fair that people could magically improve their credit by piggybacking off someone else’s. It defeats the purpose of a credit score.
After all, maybe the kid didn’t get to use the card. Or maybe the person actually bought the authorization. Lots of credit repair places were using this as a scheme to help people fix their credit.
Simply get added, get the new card, shred it (can’t imagine the person selling their score would want it lowered), get good credit, apply for card of one’s own, drop off account. Hopefully learn a few valuable lessons and only use credit score for mortgage.
But I wouldn’t be surprised if a lot of people, once they fixed their score, completely screwed over the lenders (and themselves).
As it is, being a joint account user should still get you those same credit privileges. That’s what Micah and I are trying to do, since the credit bureaus don’t even think I exist… Might it be gaming the system? I don’t know, they must have left that possibility on purpose, so I’m guessing not.
My thoughts? They were trying to discourage people from selling/loaning their credit by making it harder (need full credit check to get on the account) and by making it a more serious commitment (joint vs. authorized). I don’t even know how many joint users there can be.
Important corollary to this: Well don’t trust credit repair people anyway unless they talk about paying off your debt and responsibility and such. But don’t trust any scheme which plans to add you to another person’s card. Maybe you could become a joint account holder, but people are much less likely to sell that than “authorized user” and it also requires a full credit check.