Authorized User??

[TCBNow]

Hello, its been a while since I've been on here but my boyfriend has never had any loans nor credit cards at 42.  And he finally went to finance his leased car and they gave him a 17% interest rate because he literally had no score. So I want to help build his credit using first the authorized user option and then a cc of his own. 

 

Is there a pinned topic all about Authorized Users?  Pros and Cons etc??  I read that somewhere but I can't find it. 

[FoxSamual]

I will defer to others for full details on AUs, however, I believe it is no longer as effective as it once was, Fair Issac finally wised up to this "hack".  It would be better than no file but he will no longer have "no file" with the auto loan.  Obvious pitfall is he can charge up the card and you're stuck with the bill, not saying he would do that, but it has happened to others (on Page 1 of this forum no less)

 

Tell him to find a local credit union, move his payroll deposit to them, and make them his "primary" institution (e.g., the main checking account that he pays all bills out of)

 

Wait three to six months and go to them for an auto loan re-fi.  They should do it at a much better interest rate, even if you do absolutely nothing to improve his credit between now and then, he'll have a minimal file with payments to current lender and they'll know his income/bills aren't bogus because they'll have his checking account history.  Do not let him keep a 17% auto loan any longer than absolutely necessary.

 

You can and should do other things to help him build credit, AU won't hurt, and have him get one secured credit card in his own name too, today if feasible.  Don't go crazy with applications until the auto loan is re-fi'ed, a large number of inquiries may scare off a credit union, immediate goal is to get enough of a file to qualify for the re-fi and afterwards you can worry about building a real credit history.

 

[MarvBear]

23 minutes ago, TCBNow said:

And he finally went to finance his leased car

Who was the lender?  How did he manage to lease an automobile without a credit file/score?

[hegemony]

1 hour ago, TCBNow said:

Hello, its been a while since I've been on here but my boyfriend has never had any loans nor credit cards at 42.  And he finally went to finance his leased car and they gave him a 17% interest rate because he literally had no score. So I want to help build his credit using first the authorized user option and then a cc of his own. 

 

Is there a pinned topic all about Authorized Users?  Pros and Cons etc??  I read that somewhere but I can't find it. 

 

You want to add him to a card with a long history (all positive) and low utilization (preferably one paid in full each month). You do not want to add him to a card issued by american express.

 

More importantly, he needs to open a couple secured cards from good lenders. AFter 6 months or so of reported history he should then have no problem getting better cards.

 

 

[hegemony]

some info may be old but for secured cards look here:

 

 

some info on AUs reporting for spouse/non-spouse:

 

 

at some point he should try some of the pre-screened options:

 

 

 

 

 

[TCBNow]

4 hours ago, MarvBear said:

Who was the lender?  How did he manage to lease an automobile without a credit file/score?

His dad had cosigned on all his leases.  The lender offering the 17% was Chase if I'm not mistaken,  I did actually get us into a credit union and they did offer a lower rate but still 11% I believe.  It was BCU.  

[TCBNow]

4 hours ago, FoxSamual said:

I will defer to others for full details on AUs, however, I believe it is no longer as effective as it once was, Fair Issac finally wised up to this "hack".  It would be better than no file but he will no longer have "no file" with the auto loan.  Obvious pitfall is he can charge up the card and you're stuck with the bill, not saying he would do that, but it has happened to others (on Page 1 of this forum no less)

 

Tell him to find a local credit union, move his payroll deposit to them, and make them his "primary" institution (e.g., the main checking account that he pays all bills out of)

 

Wait three to six months and go to them for an auto loan re-fi.  They should do it at a much better interest rate, even if you do absolutely nothing to improve his credit between now and then, he'll have a minimal file with payments to current lender and they'll know his income/bills aren't bogus because they'll have his checking account history.  Do not let him keep a 17% auto loan any longer than absolutely necessary.

 

You can and should do other things to help him build credit, AU won't hurt, and have him get one secured credit card in his own name too, today if feasible.  Don't go crazy with applications until the auto loan is re-fi'ed, a large number of inquiries may scare off a credit union, immediate goal is to get enough of a file to qualify for the re-fi and afterwards you can worry about building a real credit history.

 

We did get a quote from BCU the credit union that we have a savings account with and they offered 11%.  But I'm nervous to get him his own cc unless its only to autopay monthly bills to keep it being used but not at his fingertips to use for anything.  

 

Also, can't you give some Authorized Usage but never give the physical card?  That was the plan.  Either his parents oldest card or mine.  

[TCBNow]

3 hours ago, hegemony said:

 

You want to add him to a card with a long history (all positive) and low utilization (preferably one paid in full each month). You do not want to add him to a card issued by american express.

 

More importantly, he needs to open a couple secured cards from good lenders. AFter 6 months or so of reported history he should then have no problem getting better cards.

 

 

That is good to know about American Express, that was my go to for legitimate history but sounds like there is issues with them.  

Would the AU give him better ability to get a better card than secured?  If not, we'll go that route because in the next few years, we would likely want to buy a home.  

[TCBNow]

4 hours ago, FoxSamual said:

I will defer to others for full details on AUs, however, I believe it is no longer as effective as it once was, Fair Issac finally wised up to this "hack".  It would be better than no file but he will no longer have "no file" with the auto loan.  Obvious pitfall is he can charge up the card and you're stuck with the bill, not saying he would do that, but it has happened to others (on Page 1 of this forum no less)

 

Tell him to find a local credit union, move his payroll deposit to them, and make them his "primary" institution (e.g., the main checking account that he pays all bills out of)

 

Wait three to six months and go to them for an auto loan re-fi.  They should do it at a much better interest rate, even if you do absolutely nothing to improve his credit between now and then, he'll have a minimal file with payments to current lender and they'll know his income/bills aren't bogus because they'll have his checking account history.  Do not let him keep a 17% auto loan any longer than absolutely necessary.

 

You can and should do other things to help him build credit, AU won't hurt, and have him get one secured credit card in his own name too, today if feasible.  Don't go crazy with applications until the auto loan is re-fi'ed, a large number of inquiries may scare off a credit union, immediate goal is to get enough of a file to qualify for the re-fi and afterwards you can worry about building a real credit history.

 

We got another quote from a credit union for less but I think his dad may cosign the loan.  And thank for all the info.  

[TCBNow]

3 hours ago, hegemony said:

some info may be old but for secured cards look here:

 

 

some info on AUs reporting for spouse/non-spouse:

 

 

at some point he should try some of the pre-screened options:

 

 

 

 

 

Thank you hegemony, I'm gonna read these threads more tomorrow.  I appreciate your help !

[FoxSamual]

15 minutes ago, TCBNow said:

Also, can't you give some Authorized Usage but never give the physical card?  That was the plan.  Either his parents oldest card or mine.  

You can, although I would assume they could then call the bank themselves and request a replacement card, so still not something you want to contemplate without a great deal of trust.

 

I will probably AU my partner soon for her rebuilding adventure, it's a valid move, just protect yourself.

 

[FoxSamual]

18 minutes ago, TCBNow said:

We did get a quote from BCU the credit union that we have a savings account with and they offered 11%

You might get that lowered in a few months once he has a credit file, even though it will be thin, and bonus points if he parks his payroll there and makes them his "main" institution.  (It may or may not matter, not all credit unions care, but it certainly won't result in a higher rate)

 

If he can afford the payments right now I would personally suggest waiting a few months in hopes of a saner rate.  In theory he could re-fi multiple times but that comes with its own expense (title/lien fees) and if not careful can cost you more money than you save.

 

Should also say, I don't have first hand with leases, only purchases, so I'd defer to others (MarvBear is a good resource) with more experience there.  It may be totally different than a traditional loan re-fi in terms of paperwork and backend expenses.

Edited March 3, 2023 by FoxSamual

[shifter]

12 hours ago, TCBNow said:

That is good to know about American Express, that was my go to for legitimate history but sounds like there is issues with them.  

Would the AU give him better ability to get a better card than secured?  If not, we'll go that route because in the next few years, we would likely want to buy a home.  

Amex reports AU cards as opened the date the AU was added. So it doesn't provide any age. If you can add him to as old an AU card as possible that will help him with file age and AAoA. Great for helping him build. However, until he gets his own card, it won't help him get approved for his first card. So he's likely going to have to start with the secured route either way. Once he has a card seasoned for 6 months and an old AU or two, he should be able to app some decent unsecured cards and get approved. 

[TCBNow]

On 3/2/2023 at 9:53 PM, FoxSamual said:

You can, although I would assume they could then call the bank themselves and request a replacement card, so still not something you want to contemplate without a great deal of trust.

 

I will probably AU my partner soon for her rebuilding adventure, it's a valid move, just protect yourself.

 

 

Yes, that seems to be a way for someone to get ahold of a card.  Luckily, he's not really that type of guy.  He's not conniving nor is he resourceful enough to do that.  Hence why I am the one helping him get better credit and not him by himself!😂  But yeah, it is a risk for anyone.   Thanks, FoxSamual!

[direct]

I can speak from recent experience.  I added my friend to 3 of my high limit (each one at least $15k to $27k) 0 balance, and approximately 4 to 8 year old credit cards in 2021.  At the time that I added the cards, her FICO score was in the low 600's with just a car lease reporting that I was a co-applicant on (all payments paid on time) and a two closed low limit credit cards.  Her score shot up to 805 after all 3 cards reported.  Only took a month.  When she went back to the car dealer to lease a 2nd car and turn in her first leased car, she was approved on her own at the best rate.  She recently applied for a Discover IT card in December of 2022 and was instantly approved for $3k limit.  This will be her first major credit card in about 10 years.  So from this recent experience, I would say being an authorized user of the right cards, having no credit blemishes and an average reported income still works at improving an otherwise low or non existent credit score but also helps with approvals.  

 

For reference, I did not give her physical possession of the authorized user cards.  I just did it to help with her credit history and score so there was no danger of her racking up a balance or not paying.  As far as the first car lease that I cosigned...she gave me the money and I made the payments to assure there would be no damage to my credit score and payments would be made on time.

 

It wouldn't hurt to also open up at least one or more secured credit cards if the funds are available and in combination of the authorized user cards and the secured cards, a nice score and quicker success should come.

Edited March 7, 2023 by direct

[dysonrichard801]

Some of the pros and cons:

Pros:

• Can help build credit score.
• No responsibility for payments.
• Potential access to rewards.

Cons:

• Risk of misuse.
• Limited credit-building potential.
• Limited control over the account.