Will being an Authorized User help my credit score?

[joestay]

My dad has a discover card and it has many more years then my oldest line of credit, which is 8 years.  It has been paid on time as agreed and the utliization is always less then 5%.  My score is in the low 800 already and I have around 2-3% utlitization.  I only have two credit cards.

If I become an authorized user, will it boost my score? 

Will it be counted as a new account on my credit report?

Can a potential near future lender see when that account started on my report?

Will I be able to have my own log in account for discover card website so that I can get the free fico score too?

Will I get a hard pull?

Thanks

[Anonymous]

Those are all great questions.  I will allow someone more experienced with AU issues answer them.

What I will tell you is that you should add a few more of your own credit cards to your profile, even if you also decide to ask your father to add you as an AU.

The way that the scoring algorithms work, it is easier to reach into the highest levels of the range if you have three or more cards.  One of the scoring factors looks at how many open cards you have with a $0 balance.  If they are all zero that is bad.  But if you can have one card with a positive balance but several with a $0 balance you get extra points for that.  With only two cards that is not possible.

Adding more cards makes your profile "thicker" as well.  That simply means having lots of accounts.  FICO doesn't really need you to have lots of accounts, but it does like you to have more than just a few.  And scoring models like VantageScore REALLY like you to have many accounts.  Opening a few extra no-annual-fee credit cards that you really like would be good.  You can keep them open forever and down the road they will give age and stability to your profile.

[Anonymous]

There seems to be some debate over how the the CRAs treat AUs, and it appears to be evolving. Here's my understanding of how it works (which some disagree with):

The CRAs' goal is to allow a AU be impacted by the tradeline only if the AU is a spouse of the account holder. However, there isn't simple way for them to determine that (you profile isn't cross linked to your spouse's), so they use address and last name as indicators. Of course, that's not foolproof, because some spouses don't share a last name or even an address. And not everyone who shares a name and address is married. But it's the best they have.

This is consistent with my experience. My wife is an authorized user on one of my cards. It shows up on her report and seems to impact her score. I am an authorized user on an employer's credit card. It briefly showed up on my credit report, but then it disappeared and doesn't affect my score.

Here's how it's evolved (again, just my understanding from piecing together things I've read and been told).

1. Once upon a time, being an AU had no effect on your credit score. But that caused problems when a spouse died who had the credit (usually because s/he had the larger income) and the surviving spouse was seriously damaged when everything had to go into his/her name.

2. The CRAs started treating AUs just like it was their own account. But this began to be abused, to the point where someone set up a service whereby you could (for a fee) be listed as an AU on a stranger's card (without actually receiveing the card, of course).

3. The CRAs began to start trying to distinguish between spouse AUs and non-spouse AUs, as I described above. This is a less-than-perfect solution, as I also described above.

I imagine they are still tweaking their approach(es), and trying to figure it out.

The bottom line: it depends. If you share your father's address, it will probably show up and benefit your score. If you don't share an address, it may still show up and benefit your score, although it could also disappear at any point.

[Anonymous]

Since you're already in the 800's, I wouldn't bother. I'm curious, though. Are your two credit cards the only accounts in your files? Or are there others, such as a mortgage or installment loan?

[joestay]

It's just those two cards and nothing else now.

[Thomas_Thumb]

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@joestay wrote:

It's just those two cards and nothing else now.

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Awesome!

It's nice to see a high score with a thin file. As CAPTOOL suggests, I would forego the AU route. You don't need the crutch.

Down the road you will want new credit (card loan, mortgage or even another CC). Unfortunately, thin files take a rather large hit on AAoA for new credit. Don't get discouraged if/when your score drop significantly due to new credit. You should still remain in the top tier for loan rates and the scores will bounce back.

[CreditDunce]

It used to be that most AU accounts inherited the entire credit history.  If you were added as an AU on a 20 year old account, your new AU account would show 20 years of history.  The exception was Amex AUs have always been new accounts.  I have read that is no longer the case.  AU accounts may now show up as a new account.  If that is the case, you are much better of getting your own new account. 

I was actually reading this thread to see if anyone would confirm how AU account now show up.   I can't confirm if new AU accounts are actually showing up as new or not.

[Revelate]

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@CreditDunce wrote:

It used to be that most AU accounts inherited the entire credit history.  If you were added as an AU on a 20 year old account, your new AU account would show 20 years of history.  The exception was Amex AUs have always been new accounts.  I have read that is no longer the case.  AU accounts may now show up as a new account.  If that is the case, you are much better of getting your own new account. 

I was actually reading this thread to see if anyone would confirm how AU account now show up.   I can't confirm if new AU accounts are actually showing up as new or not.

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Any idea what lenders are doing that now?  AU's would be lender dependent, I haven't kept track honestly but you're right in suggesting Amex was the only one who was doing that when I took a break from the forums... if that's changed substantially in the last six months I'd be interested to know about it.

[CreditDunce]

I read a post here saying it had changed, but there were no details.   I didn't post in the thread asking for confirmation.  I wouldn't assume the info is correct until we have more reports.    I was really hoping I could get someone to confirm or deny it myself.

[Revelate]

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@CreditDunce wrote:

I read a post here saying it had changed, but there were no details.   I didn't post in the thread asking for confirmation.  I wouldn't assume the info is correct until we have more reports.    I was really hoping I could get someone to confirm or deny it myself.

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If I were married with someone who had a variety of cards I'd go test it... not like it's hard to get AU's off anyway other than the Amex new tradeline bit.  I would've assumed we would've heard screams though if many lenders were doing that as it's a pretty big departure from before, though it'd be a good anti-abuse measure that the lenders could implement if they weren't happy with the way FICO 8 / FICO 9 AU handling worked out.