Authorized User On Low Credit Limit Card

[stan_the_man]

I'm working on improving my wife's credit score -- which currently is 697 TU FICO / 698 EX PLUS (up from 680 TU FICO / 681 EX PLUS in November/December) -- and I'm looking for advice regarding adding her as an authorized user to my oldest account.

Due to some negative information on her reports (multiple 30 days late, a couple 60 and 90 days late, a 120 days late and a paid charge off), credit card companies have balked at approving her for any card or for anything with a credit limit above $500.

When she applied for a secured Citibank card last fall, she was actually rejected for not carrying a balance on the card she had at the time (First Premier). After I did some research, she applied for a Chase card and was approved for a $400 credit limit -- after which we closed the First Premier card because I want nothing to do with the bloodsuckers. She's been using the Chase card since; never going above $200 balance and always carrying a small balance on the statement date.

In the meantime, I added her as an authorized user to my Chase card opened on 2/2003 with a $10K+ credit limit. This is now reporting to her credit reports (with no notation that she is an authorized user), and is her oldest trade line.

I also can add her to two older trade lines, but one of these has a low credit limit (HSBC cut my credit limit by more than 90% after 5-1/2 years of inactivity):

• 6/2000 HSBC $300 CL
• 7/2001 Amex $7,700 CL

It seems to me that adding her as an authorized user to the Amex is a no brainer, she gets another 1-1/2 years of history, and an account with a decent credit limit and perfect history (no late payments ever, good utilization, etc.).

But, after reading the following in the PLUS score explanation, I'm starting to wonder if adding the HBSC card will actually improve her credit score (despite adding a 10-year-old trade line that also has no late payments and good utilization -- this account is 13 months older than the Amex and 32 months older than the Chase account):

What factors LOWER your PLUS Score:

Having low credit limits on your accounts and loans counts negatively against your credit score. Having a high amount of credit is a positive factor because it indicates to lenders that other creditors have trusted you by lending you money in the past. However, since your major credit card limits are generally low, lenders may think you don't have enough experience with high limits.

Will adding the HSBC trade line help or hurt my wife's credit score?

FYI -- I'm now using the HSBC card every month for $50 to $15, and paying it in full after the statement closes. Also, I tried getting a credit line increase on the card, but they told me that no increase can be made before September due to a pending system update.

[Wolf3]

I agree with the AMEX AU.    I don't think HSBC will help much.    I think it would be better if your wife got a 2nd card soon. .

[mauve]

The limits are not a factor in FICO scoring, other than as a part of the equation to determine utilization.  For optimal FICO scoring, in terms of card usage, you want to have a balance on 1/2 or less of your cards in a given month.  Some people rotate which card carries a balance at reporting time every month to keep them active and reporting.  On the card(s) that are reporting balances, the balance is best between 0 - 9%.  The way the limit factors in is that 10% of a $300 limit is only $30.  In terms of FICO, I would suggest 1) maximizing her average age of accounts 2) making sure that no more than half the cards on her report have balances and 3) making sure that no card has a balance above 9%, which will also force the utilization for all the cards to be below that number.  She can also try to send goodwill letters to anyone reporting lates on her.  If you haven't already (in the last year), have her pull her reports from annualcreditreport.com and see when these lates are falling off of her reports, and if there's any negative information that you're not accounting for.

[guiness56]

Adding any CC will increase the overall amount of credit you have.  It can't hurt.

[mauve]

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@guiness56 wrote:

Adding any CC will increase the overall amount of credit you have.  It can't hurt.

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To clarify:  adding a new one would drop her average age of accounts (new, as opposed to becoming an authorized user on an older account)

[stan_the_man]

Just learned about the concept of a GW letter last night and drafted on for the paid charge off trade line and another trade line that had a 90 days late. We're going to give it a try.

After looking at the report, I also realized that the paid in full date of the paid charge off was misreporting to Experian to have happened 2-3 months more recent later than it did. Since we have some time before we will apply for any mortgage, we're going to hold off disputing this right until after we get a response to the GW letter.

Just wondering, has anyone ever sent a GW letter to a creditor more than once and succeeded on secondary tries?

[stan_the_man]

Going to add her as an AU on the AMEX tonight.

My wife's Chase card was issued December. Any clue whether they will consider a credit line increase?

[guiness56]

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@mauve wrote:

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@guiness56 wrote:

Adding any CC will increase the overall amount of credit you have.  It can't hurt.

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To clarify:  adding a new one would drop her average age of accounts (new, as opposed to becoming an authorized user on an older account)

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I was making a comment in general.  I didn't read what you had posted.

[mauve]

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@guiness56 wrote:

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@mauve wrote:

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@guiness56 wrote:

Adding any CC will increase the overall amount of credit you have.  It can't hurt.

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To clarify:  adding a new one would drop her average age of accounts (new, as opposed to becoming an authorized user on an older account)

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I was making a comment in general.  I didn't read what you had posted.

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I know, I was just trying to make sure it didn't get taken out of context. 

[stan_the_man]

I've since gotten this CL upped to $5K due to a product change. Do you think it would now be worth adding my wife as an authorized user?