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Regular Contributor
Officer737
Posts: 149
Registered: ‎01-02-2008
0

Best Authorized User Method to use to help with rebuild?

I have someone that is willing to help me rebuild once my Ch 7 is discharged. I already have the installment portion of the rebuild covered by my student loans, car loan and small secured loan thru my CU. Versus using the small limit or secured card method I am considerfing the authorized user method. My fiancee has excellent credit and we are looking at adding me to two of her longest CC accounts that has a min of $5k limit with a perfect payment history and zero balance then open a new TL with me added as an AU with a $5k limit use that for my <10% utilization card. As my scores get better than open my own CC accounts. This is a good or bad idea? What would be the best card to to use for low utilization card?


Starting Score: 502
Current Score: 10-21-2014 CK TU 614, EX 637, EQ 630
Goal Score: 700


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Mega Contributor
RobertEG
Posts: 18,548
Registered: ‎03-19-2007
0

Re: Best Authorized User Method to use to help with rebuild?

Having accounts of another on your credit report has its plusses and minuses.

 

On the plus side, when your score is generated, the AU accounts are included in your scoring the same as if it were your own history.

Thus, if the hsitory on that account is good, it can provide a score increase.

 

On the negative side, once an AU is included in your scoring, it means that your score no longer reflects your own individual credit history, and thus the score is not an assessment of your own personal payment risk.

 

Credtors considering apps for new credit vary in the depth of their determinations.

If the amount of revolving credit being approved or the principal amount of a loan is relatively small, many creditors will rely primarily or solely on your credit score, since it is simply, quick, and cheap process.  In that event, if they dont do a manual review of your credit report, they will be unaware that your score is not based solely on your own history.  Thus, it is an effective means for building or rebuilding.

 

However, as the amount of credit being extended increases, creditors are more likely to do a more thorough review in their determinations, and thus may do a manual review of your credit report.  Seeing an AU tells them that your score is not an assessment of your own personal risk, and thus they may tend to discournt that score, or in some cases, require removal of the AU account as a condition for their approval process, thus permitting them to obtain a "real" score.

Regular Contributor
Officer737
Posts: 149
Registered: ‎01-02-2008
0

Re: Best Authorized User Method to use to help with rebuild?


RobertEG wrote:

Having accounts of another on your credit report has its plusses and minuses.

 

On the plus side, when your score is generated, the AU accounts are included in your scoring the same as if it were your own history.

Thus, if the hsitory on that account is good, it can provide a score increase.

 

On the negative side, once an AU is included in your scoring, it means that your score no longer reflects your own individual credit history, and thus the score is not an assessment of your own personal payment risk.

 

Credtors considering apps for new credit vary in the depth of their determinations.

If the amount of revolving credit being approved or the principal amount of a loan is relatively small, many creditors will rely primarily or solely on your credit score, since it is simply, quick, and cheap process.  In that event, if they dont do a manual review of your credit report, they will be unaware that your score is not based solely on your own history.  Thus, it is an effective means for building or rebuilding.

 

However, as the amount of credit being extended increases, creditors are more likely to do a more thorough review in their determinations, and thus may do a manual review of your credit report.  Seeing an AU tells them that your score is not an assessment of your own personal risk, and thus they may tend to discournt that score, or in some cases, require removal of the AU account as a condition for their approval process, thus permitting them to obtain a "real" score.


Thanks for the quick reply, a lot of good information in there. Primarily I am just going to do it to rebuild some, get my on TLs and then go on my own from there. Once we get married I figured we would be added on each other's accounts anyways, part of the reason I am trying to get my scores back up.


Starting Score: 502
Current Score: 10-21-2014 CK TU 614, EX 637, EQ 630
Goal Score: 700


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