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Authorized user lowering credit score


smtex2022
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Good day,

I would appreciate any advice anyone has on how to proceed in this situation. For context, I am a college student soon to graduate so I need to have a good credit score as when I graduate a good credit score is important to get a nice rental apartment. 

When I started college, I signed up as an authorized user for my parent's account of a credit card, this with the idea that I could use it in an emergency. I was also stupid and did not open a credit card for myself until past summer. The current problem is that my parents are tight on money so they are using a great percentage of the credit limit of the account I am an authorized user on. This has dropped my credit score, beceause the credit utilization ratio is very high. So now, I face a conundrum because I could just stop being an authorized user on the account, and while my credit utilization ratio would drop, as I barely used my own credit card, my credit history would also drop from about 4 years to less than 1 year, possibly negatively impacting my credit score. But if I don't drop the account I am an authorized user on I will be waiting for a miracle for my parents to be able to reduce the amount of credit they are using in that account. Please, any advice would be appreciated.

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10 hours ago, smtex2022 said:

Good day,

I would appreciate any advice anyone has on how to proceed in this situation. For context, I am a college student soon to graduate so I need to have a good credit score as when I graduate a good credit score is important to get a nice rental apartment. 

When I started college, I signed up as an authorized user for my parent's account of a credit card, this with the idea that I could use it in an emergency. I was also stupid and did not open a credit card for myself until past summer. The current problem is that my parents are tight on money so they are using a great percentage of the credit limit of the account I am an authorized user on. This has dropped my credit score, beceause the credit utilization ratio is very high. So now, I face a conundrum because I could just stop being an authorized user on the account, and while my credit utilization ratio would drop, as I barely used my own credit card, my credit history would also drop from about 4 years to less than 1 year, possibly negatively impacting my credit score. But if I don't drop the account I am an authorized user on I will be waiting for a miracle for my parents to be able to reduce the amount of credit they are using in that account. Please, any advice would be appreciated.

welcome to CB!

 

where are you seeing the score? Are you looking at FICO scores? If not, ignore the score.

 

How high is their utilization on the card?

 

You should consider opening a couple more cards.

 

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Look...it is as simple as this: you asked your parents to add you as an AU because you would derive a potential benefit.  You are no longer deriving that benefit.  Have them remove you from the card and then you dispute with the bureaus as having no contractual responsibility.  There isn't enough age there to worry about. 

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16 hours ago, centex said:

Look...it is as simple as this: you asked your parents to add you as an AU because you would derive a potential benefit.  You are no longer deriving that benefit.  Have them remove you from the card and then you dispute with the bureaus as having no contractual responsibility.  There isn't enough age there to worry about. 

 

Spot on.  You only want to be an AU on accounts that are clean and have modest utilization.  When that's no longer the case, the AU status hurts more than it helps and it's time to sever the AU relationship and dispute the account off your credit reports.

 

You can always restore the AU relationship at a later date if the account is restored to a beneficial status.

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There is another option.  Find someone else that has high credit limits, long established accounts with low to no utilization and become an authorized user on their accounts.  Have your parents remove you from their accounts.  And now with the knowledge that you have, get a few new cards of your own and let them age.

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On 1/14/2022 at 8:41 PM, direct said:

There is another option.  Find someone else that has high credit limits, long established accounts with low to no utilization and become an authorized user on their accounts.  Have your parents remove you from their accounts.  And now with the knowledge that you have, get a few new cards of your own and let them age.

Many of the bureaus caught on to *that* game...they generally want a link via address between the parties. 

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Many of the bureaus caught on to *that* game...they generally want a link via address between the parties. 

My experience with the kids is that they will still add the accounts to their CRA reports. The big problem, though, is that now a lot of credit card issuers have caught onto the AU scam and are not simply overlooking those tradelines.

My youngest son has been an authorized user on a couple of my oldest AmEx cards and a couple of other very old cards for about 6 years before turning 18 and applying on his own. Everybody except USAA shot him down for not having any revolving credit accounts in spite of about 4 old AU accounts.

After doing the Discovery and Navy secured card trick, after about a year now everything he applies for gets approved.


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1 hour ago, PotO said:


My experience with the kids is that they will still add the accounts to their CRA reports. The big problem, though, is that now a lot of credit card issuers have caught onto the AU scam and are not simply overlooking those tradelines.

My youngest son has been an authorized user on a couple of my oldest AmEx cards and a couple of other very old cards for about 6 years before turning 18 and applying on his own. Everybody except USAA shot him down for not having any revolving credit accounts in spite of about 4 old AU accounts.

After doing the Discovery and Navy secured card trick, after about a year now everything he applies for gets approved.
 

Would it be a correct presumption, though, that your son shares a last name with you? 

 

The post to which I responded to was knocking on the door of buying tradelines...they didn't mention using other family members. 

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Would it be a correct presumption, though, that your son shares a last name with you? 
 
The post to which I responded to was knocking on the door of buying tradelines...they didn't mention using other family members. 

No, the presumption would be incorrect. And since he used his address at the university, even his address was not the same as mine.

Even when I added my wife and also her sister to some of my accounts, they reported on their credit reports.


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On 1/21/2022 at 8:49 AM, PotO said:

My experience with the kids is that they will still add the accounts to their CRA reports. The big problem, though, is that now a lot of credit card issuers have caught onto the AU scam and are not simply overlooking those tradelines.

 

AU accounts are a matter of record, so of course they're detailed in the AU's credit report.  The issue is that the FICO credit score algorithm itself now requires some linkage between account owner and AU, otherwise the account is disregarded by some or all of the score calculation.

 

As an aside, this sounds improbably convoluted.  I don't have a clue how such a linkage is established (reportedly, shared address).  However, if this works as is purported, your son's credit score is what sliced him out of credit opportunities until establishing secured accounts in his own name.

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AU accounts are a matter of record, so of course they're detailed in the AU's credit report.  The issue is that the FICO credit score algorithm itself now requires some linkage between account owner and AU, otherwise the account is disregarded by some or all of the score calculation.
 
As an aside, this sounds improbably convoluted.  I don't have a clue how such a linkage is established (reportedly, shared address).  However, if this works as is purported, your son's credit score is what sliced him out of credit opportunities until establishing secured accounts in his own name.

Actually, no.

From day one his FICO Score was 750+. FICO does not require any linkage.

His first card in his own was an unsecured USAA Visa for $10k. After that, the specific reason why a few declined him was because he didn't have any "relevant credit history". When talking with underwriters, they explained that all his accounts were AU and they would like to see some that were entirely his.

Again, FICO does not distinguish between your accounts an an AU account when determining your score. What is supposed to happen, as they keep saying in the press, is that AU accounts without a nexus to the actual account owner will not appear in your credit reports. While it may happen for some, it doesn't happen for many.

It appears now that credit card companies have caught on and some are either discounting or else entirely ignoring AU accounts.


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