Authorized User on account

[bbrannan]

I am wondering if I added my sister as an authorized user on one of my accounts to help her in her credit rebuild, would her low credit score affect my credit at all? I know that being an AU on my account will reflect positive on her credit by increasing her utilization but I am just trying to make sure that there are no downsides to trying to help her out. Any suggestions?

[MarineVietVet]

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@bbrannan wrote:

I am wondering if I added my sister as an authorized user on one of my accounts to help her in her credit rebuild, would her low credit score affect my credit at all? I know that being an AU on my account will reflect positive on her credit by increasing her utilization but I am just trying to make sure that there are no downsides to trying to help her out. Any suggestions?

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Just adding her will have no impact on your score and yes it can help her IF the account is older than any of hers (older than her current AAoA is even better), IF the payment history is long and clean, IF the utilization is very low, and IF it will report to the CRA's. Not all cards will do this. You need to ask the company first. She will inherit the entire history of this account.

One caveat however; if this account starts to go south your credit will be affected as well. Keep that in mind.

[Dishpro]

To clarify the caveat, if his sisters credit goes south his credit will not be affected by anything at all on her credit report? The account owner will not be affected by anything on the authorized users credit report. Do I understand this correctly?

[bbrannan]

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@Dishpro wrote:
To clarify the caveat, if his sisters credit goes south his credit will not be affected by anything at all on her credit report? The account owner will not be affected by anything on the authorized users credit report. Do I understand this correctly?

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If I understand this correctly, my credit would only be negatively affected by negative activity on the account that she is an AU on. Not any other TL that she may have. Is that correct?

[MarineVietVet]

Your credit would not be affected by anything in the AU’s credit profile as long as you aren't joint account holders.

But if you give an AU charging ability on the account they were added to and it goes south then your entire credit profile could be affected; not just the one TL.

For example if the AU charges something and that raises your utilization then your score will be impacted.

Worse case scenario is an account gets charged off or goes to collections because the AU was not responsible.

These are just "what-ifs" but they can and do happen. That's why I suggest never giving an AU access to any of your cards/accounts.

[bbrannan]

Update: Not sure why we did not figure this out earlier, but she got her own membership with NFCU through me and applied for her own CC's. Instanly approved for cashrewards Visa $7500! She got a better CL than I did! And here I was trying to help HER out! ha Super proud for her though! Just wanted to share that.

[AVeryHappyDad]

Congratulations to her!

[Anonymous]

Does anyone know what is the logic behind an account affecting an AU's credit report?

An AU, vs a joint account holder is not responable for the payment, and they don't even have to sign anything to become an AU, so it seems unfair and inappropriate for it to affect their score. 

I made my minor children AU's in case of an emergency  if / when I wasn't readily able to help them.  (i.e. car break down).  Because my account is in good standing it helped them start their own credit upon reaching age of majority,  but it occured to me children could just as easily start out w/bad credit if their parent(s) didn't pay on time. Also, I was carrying a balance, it was MY BALANCE not theirs, fortunately it didn't reflect too negatively on their score, but my balance on their report, IMO is also a privacy concern. 

[Anonymous]

As for the Privacy Concern, I understand your perspective. However, my thoughts are when the credit report is run your child, the report is not smart enough to know the BALANCE is YOUR BALANCE. It is one "account", so therefore any balance on the account will be reflected on credit reports run for the account holder or any AU on the account.

[Jutz]

While we're on the topic, the person being added as AU does not have any inquiry at all when added, correct?  Since being added as an AU isn't credit dependant I had assume they don't do a pull at all, but wanted to be sure.