topic Re: Disadvantage in adding an Authorized user in Credit Cards

Disadvantage in adding an Authorized user

villemiami — Fri, 13 Sep 2024 21:11:12 GMT

Is there ant Disadvantage in adding an Authorized user?

For example, does it lower the chance of getting approved for a new credit card?

Re: Disadvantage in adding an Authorized user

unsungivy — Fri, 13 Sep 2024 21:12:54 GMT

@villemiami wrote:
Is there ant Disadvantage in adding an Authorized user?
For example, does it lower the chance of getting approved for a new credit card?

It doesn't hurt your chances, unless they abuse your card. Be wary who you give that power to.

Re: Disadvantage in adding an Authorized user

Aim_High — Sat, 14 Sep 2024 02:04:17 GMT

@unsungivyhas a good point, @villemiami, in that the biggest risk is being careless about who you bestow that card upon. Because ultimately, YOU are responsible for what they do with the card. You must be able to trust them fully and have a close relationship. And just because you trust a family member in general doesn't mean that you can trust them with (YOUR) money and (YOUR) credit. Some really good and well-meaning people don't know how to manage money.

Some lenders may be reluctant to approve someone as AU who is not a relative. And others may balk at adding too many authorized users to an account.

Re: Disadvantage in adding an Authorized user

Slabenstein — Fri, 13 Sep 2024 21:28:47 GMT

The disadvantage is you're giving someone access to your credit line who has no responsibility to repay it. A spouse with whom you have combined finances or children whom you want to be able to use your credit line are really the only two cases where I'd add an AU.

Re: Disadvantage in adding an Authorized user

Bockrocker — Fri, 13 Sep 2024 21:43:03 GMT

The authorized user's name and address becomes associated with your name and your credit profile. If they default on other, unrelated loans creditors will pull every address then can and you might end up getting mail or actual visits from people demanding payment (not that you have to pay them, but some people don't appreciate such things)

Re: Disadvantage in adding an Authorized user

Anonymous — Fri, 13 Sep 2024 23:04:53 GMT

@Aim_High wrote:
@unsungivyhas a good point, @villemiami, in that the biggest risk is being careless about who you bestow that card upon. Because ultimately, YOU are responsible for what they do with the card. You must be able to trust them fully and have a close relationship. And just because you trust a family member in general doesn't mean that you can trust them with (YOUR) money and (YOUR) credit. Some really good an well-meaning people don't know how to manage money.

Some lenders may be reluctant to approve someone as AU who is not a relative. And others may balk at adding too many authorized users to an account.

Right, and another question is the reason for adding an AU. While perhaps the most common is to give access to credit, with all the warnings above, another, especially amongst FICO-aware types, is to improve the credit score (usually of the AU, but sometimes of the main cardholder). This won't work with all lenders, but does for some. In these type of cases, you don't actually give the card to the AU, so a major part of the risk goes away.

Re: Disadvantage in adding an Authorized user

Lou-natic — Sat, 14 Sep 2024 16:30:49 GMT

@Bockrocker wrote:
The authorized user's name and address becomes associated with your name and your credit profile. If they default on other, unrelated loans creditors will pull every address then can and you might end up getting mail or actual visits from people demanding payment (not that you have to pay them, but some people don't appreciate such things)

Yeah this is the worst part about adding an AU that most people gloss over. This happened to me because I was trying to help my sister rebuild her credit, I made her an AU but had the card sent to me so she couldn't run up any debt in my name. As a "just in case" measure becuase people can relapse. The outcome was me getting lots of credit related mail in her name sent to my address. One of the good things about this was she didn't get lured in by a bunch of sub prime lenders but I'm the one that got stuck trashing them all.

My advice is, if you are going to do it make sure it's for someone you love. I doubt I'd ever do it again.

Re: Disadvantage in adding an Authorized user

Zeiram — Sun, 15 Sep 2024 00:01:35 GMT

@villemiami wrote:
Is there ant Disadvantage in adding an Authorized user?
For example, does it lower the chance of getting approved for a new credit card?

Adding someone as an AU can hurt them if you add them to too many of your cards. Some banks have internal algorithms that factor in total number of credit cards, and count authorize user cards and then reject for "too many active credit cards".

If you're adding someone with a thin credit file to 1-2 of your older accounts and they've never had missed payments and you're never using high amounts of the credit line, it's more likely to help them.

Re: Disadvantage in adding an Authorized user

Zeiram — Sun, 15 Sep 2024 00:05:41 GMT

@Bockrocker wrote:
The authorized user's name and address becomes associated with your name and your credit profile. If they default on other, unrelated loans creditors will pull every address then can and you might end up getting mail or actual visits from people demanding payment (not that you have to pay them, but some people don't appreciate such things)

It never adds my mother's address to my credit file, and AU accounts show up on the other person's credit file, not yours, and it does not say who is the primary account holder, just that Responsibility is "Authorized User".

You're never responsible for actually paying a card you're an authorized user on. The primary account holder is. You'll probably make them really mad if you abuse it, but as far as liability for paying, it's the primary account holder's problem. Legally.

Re: Disadvantage in adding an Authorized user

Zeiram — Sun, 15 Sep 2024 00:06:45 GMT

@Anonymous wrote:
@Aim_High wrote:
@unsungivyhas a good point, @villemiami, in that the biggest risk is being careless about who you bestow that card upon. Because ultimately, YOU are responsible for what they do with the card. You must be able to trust them fully and have a close relationship. And just because you trust a family member in general doesn't mean that you can trust them with (YOUR) money and (YOUR) credit. Some really good an well-meaning people don't know how to manage money.

Some lenders may be reluctant to approve someone as AU who is not a relative. And others may balk at adding too many authorized users to an account.
Right, and another question is the reason for adding an AU. While perhaps the most common is to give access to credit, with all the warnings above, another, especially amongst FICO-aware types, is to improve the credit score (usually of the AU, but sometimes of the main cardholder). This won't work with all lenders, but does for some. In these type of cases, you don't actually give the card to the AU, so a major part of the risk goes away.

Best to just add them, then freeze their card and cut it up when it arrives. Then nothing can use that card number and there is no card.

Re: Disadvantage in adding an Authorized user

ptatohed — Sun, 15 Sep 2024 07:16:01 GMT

A lot of doom and gloom in this thread. One has to assume if you are considering adding an AU, you've already thought it through and deemed them responsible and trustworthy. My wife and I apply for cards and make each other AUs. No problem. No need for us to each apply for our own same cards. e.g. the Discover and the Chase Amazon cards you see in my sig are my wife's account with me as an AU. Conversely for most of the other cards in my sig. No problem. I made my 14yo an AU on my citi DC and Cap1 Savor. No issues. If you want to add an AU, go for it. You obviously trust them if you've even made it this far in the decision making process.

Re: Disadvantage in adding an Authorized user

unsungivy — Sun, 15 Sep 2024 13:06:53 GMT

@ptatohed wrote:
A lot of doom and gloom in this thread. One has to assume if you are considering adding an AU, you've already thought it through and deemed them responsible and trustworthy. My wife and I apply for cards and make each other AUs. No problem. No need for us to each apply for our own same cards. e.g. the Discover and the Chase Amazon cards you see in my sig are my wife's account with me as an AU. Conversely for most of the other cards in my sig. No problem. I made my 14yo an AU on my citi DC and Cap1 Savor. No issues. If you want to add an AU, go for it. You obviously trust them if you've even made it this far in the decision making process.

No need to have applied for your own card in most cases anyways? Unless it's a common instance for you to need to have a physical card IN YOUR OWN NAME (such as Platinum Lounge access) it just makes your credit profile inaccurate and lowers your Average Age of Accounts (if it's new credit) . Your credit limit isn't your actual credit limit, it's a little wonky for calculating AZEO, and if something happens to them (death or divorce) you just lost all that credit anyways, and it could get tied up in legalities even if you're the primary. The moment there's no NEED for P2 to be an AU on a card, or vica versa, I have made sure we get removed.

In some cases, such as Amazon, you can attach the same card to all Household accounts for the 5% just fine. A friend of mine's partner added their name for an Amazon recently without asking, and it immediately lowered the friend's age of accounts. Now my friend is going through getting that pointless AU removed and it off their credit reports, since they weren't even consulted and Chase didn't ask for the SSN. The partner didn't even think about it, since having cards in both names just seemed like "what you do" in their eyes🤦‍♀️

In most cases, you can use Digital Wallet, which you can certainly add a card to multiple different ones. Even the ones you call in for and TELL them you need it approved in your partner's wallet.

All the cards that P2 and I are currently AUs on of each other are Travel Cards (also, these are the only cards that charge a fee for an AU of those in our wallets, so we're not escaping any AU fees and that's not a factor here), because that is the most likely scenario to need a physical card in your own name (namely for various lounge access, including things like Priority Pass membershps being for each AU). Previously, P2 was an AU on two of my original credit cards (BofA and AmEx Blue/EDP because their credit sucked, and we thought they needed their own card for usage... and they're the reason my original 3 CCs sat at maxed out for several years), and I was AU on their Savor when we first got it and it was seeing heavy usage. I removed P2 as AU as soon as those cards were no longer daily drivers, and had them remove me as AU on the Savor likewise (both TransUnion and Equifax removed the Savor from my credit reports, however I had to open a dispute for Experian to do so... but as soon as it was off my account, my Average Age of Accounts went up and that crossed the threshold into "Excellent" for me at the time.)

Currently P2 is AU on my Platinum and CSP (previously CSR) cards, and I'm AU on the Ritz-Carlton and the AAdvantage Biz (which does not show on my credit report, since it's a business card). Everything else is handled via digital wallet, a duplicate card that DOES NOT need to be in the person's name for most use (chip payments don't care) such as a rotating category or the few cards that don't allow digital wallets (such as SYW, Best Buy, and Macy's), or handing them the card for a specific purchase.

Since P2 has been known to carry more cards then are needed when they travel "just in case" (including ones with FTFs out of the country, even when specifically told not to), I find it limits each of our exposure to only have what we are each responsible for in our physical wallets and on our credit reports as much as possible.

Re: Disadvantage in adding an Authorized user

Anonymous — Sun, 15 Sep 2024 13:13:46 GMT

@unsungivy wrote:

In most cases, you can use Digital Wallet, which you can certainly add a card to multiple different ones. Even the ones you call in for and TELL them you need it approved in your partner's wallet.

This! Since the advent of digitial wallets, I've stopped adding P2 to my cards and vice-versa. Where necessary and possible we have joint cards (to help after death events!) otherwise one card between us works fine. Most places round here take wallets, otherwise one of us remembers to take the card

Re: Disadvantage in adding an Authorized user

Aim_High — Sun, 15 Sep 2024 21:43:44 GMT

@ptatohed wrote:
A lot of doom and gloom in this thread. One has to assume if you are considering adding an AU, you've already thought it through and deemed them responsible and trustworthy. My wife and I apply for cards and make each other AUs. No problem. No need for us to each apply for our own same cards. e.g. the Discover and the Chase Amazon cards you see in my sig are my wife's account with me as an AU. Conversely for most of the other cards in my sig. No problem. I made my 14yo an AU on my citi DC and Cap1 Savor. No issues. If you want to add an AU, go for it. You obviously trust them if you've even made it this far in the decision making process.

I think adding DW or DH as an AU is the most common method, and yes I agree that is mostly a no-brainer. Most people trust their spouse, discuss money decisions, and work together for the common good of the household. Even adding a parent or child is most likely a fairly safe option. I think this was more directed at adding other people, and I've seen it go to some extremes. Trying to help friends or distant family members who don't even live in the same household is done more often than you might think. It's opening a can of worms when it goes outside the marriage or household. It's completely different from adding a spouse.

Re: Disadvantage in adding an Authorized user

ptatohed — Mon, 16 Sep 2024 07:08:56 GMT

@Aim_High wrote:
@ptatohed wrote:
A lot of doom and gloom in this thread. One has to assume if you are considering adding an AU, you've already thought it through and deemed them responsible and trustworthy. My wife and I apply for cards and make each other AUs. No problem. No need for us to each apply for our own same cards. e.g. the Discover and the Chase Amazon cards you see in my sig are my wife's account with me as an AU. Conversely for most of the other cards in my sig. No problem. I made my 14yo an AU on my citi DC and Cap1 Savor. No issues. If you want to add an AU, go for it. You obviously trust them if you've even made it this far in the decision making process.
I think adding DW or DH as an AU is the most common method, and yes I agree that is mostly a no-brainer. Most people trust their spouse, discuss money decisions, and work together for the common good of the household. Even adding a parent or child is most likely a fairly safe option. I think this was more directed at adding other people, and I've seen it go to some extremes. Trying to help friends or distant family members who don't even live in the same household is done more often than you might think. It's opening a can of worms when it goes outside the marriage or household. It's completely different from adding a spouse.

I hear you, I just think a lot of the answers swayed from the OP's question which I think was aimed mostly at financial/credit negatives to adding an AU as far as applying for future credit, etc. Not so much 'what if I don't pick a trustworthy AU?'.