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Will This Authorized User Charge Card Be a Stumbling Block in the Underwriting Process?

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Tarkovsky
Established Member

Will This Authorized User Charge Card Be a Stumbling Block in the Underwriting Process?

Greetings,

 

I've searched the forums to see what others' past experiences have been regarding authorized user (AU) accounts and what effect they may have on the mortgage application process, but most of what I've read has been specific to the case where someone is an AU on a family member's account (and generally one with relatively small balances). In my particular case, I'm an authorized user on my employer's AMEX Platinum card, which my credit report shows as having had a past high balance of approximately $140,000. The card is always paid in full (no negative remarks to speak of), but it does typically rack up anywhere from $30,000 to $100,000 in new business expenses each month. As a consequence, I'm wondering how an underwriter would handle this account in evaluating my credit profile, and particularly, if they would request its removal so that my credit could be re-scored (as I've read does sometimes happen).

 

To that extent, I can think of three ways in which this AU account may be impacting my score (both positively and negatively), and for which an underwriter may request a re-score:

 

  1. The age of the account in question is 39 years, which boosts my AAoA up to 11 years. That said, I did acquire my own personal AMEX Platinum card about three years ago, which thanks to AMEX's back-dating policy, gives me another account that also shows as being 39 years old, independent of the AU account. Without these two cards, I'd estimate my AAoA somewhere around seven years.
  2. The high past balance ($140,000) is, as I understand it, potentially beneficial under some earlier FICO scoring models (e.g., FICO-98), due to those scoring models using the highest past balance as the denominator in the credit utilization calculation. (Perhaps someone can confirm or disconfirm this.)
  3. The high current balance (e.g., $50,000 in any given month) may negatively impact my score by way of high credit utilization, provided the scoring model used by the lender factors in charge card balances. It's my understanding that the older FICO versions used by mortgage lenders (i.e., FICO-98 and FICO-04) may do just that, though I'm not clear on which does or does not. (Again, perhaps someone can clarify.)

I have 20 accounts that show up on my credit report (no collections or bankruptcies), but only five of them are active: the aforementioned AU Amex, the aforementioned personal AMEX, a personal Visa card, and two consolidated federal student loans, all of which are paid on time, and in the case of the charge and credit cards, are paid in full each month. The other 15 accounts are older accounts that report as closed/"pays as agreed" (e.g., paid off car loans, old store cards, paid off student loans, etc.). Given that I only have five active accounts, is an underwriter likely to feel that the AU AMEX is factoring too heavily in my credit profile to the point that he or she would request it be removed for re-scoring? Given that access to this charge card is vitally important for my work, removing it really isn't an option for me. My gut instinct is that a good lender will be able to work around this, but I was hoping to get a "head's up" before taking the plunge.

 

Thanks in advance for your insight.

Message 1 of 4
3 REPLIES 3
Anonymous
Not applicable

Re: Will This Authorized User Charge Card Be a Stumbling Block in the Underwriting Process?

I wish I had some advice to offer but I don't, so the next best thing I can do is comment here & keep your post on the first page. Hopefully, someone will have some answers for you.

Message 2 of 4
wagsk1
Regular Contributor

Re: Will This Authorized User Charge Card Be a Stumbling Block in the Underwriting Process?

Both lenders I dealt with said they didn`t bother with counting a AU account due to it not being my personal account.

Message 3 of 4
ezdriver
Senior Contributor

Re: Will This Authorized User Charge Card Be a Stumbling Block in the Underwriting Process?

An authorized user is not legally responsible for the debt on that credit card. Being an AU on your bosses credit card should not be an issue. 

Message 4 of 4
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