Authorized Users

[rred4]

If someone is an authorized user on my American express card will the credit  bureau show the account on his credit report as authorized user. If so how does it benefit him if everyone that pulls his report knows its not his account?

[FireMedic1]

If its a charge card. It wont do anything. If its a revovler. This is from our Moderator @K-in-Boston in another thread:

"If the card were to report on your credit bureau reports, it would be listed as a newly opened account. Amex AUs no longer inherit the account age or payment history as with other cards. If it greatly helps your utilization, you may see a scoring boost but that may be discarded by lenders as many of their internal mechanisms discard AU accounts."

[K-in-Boston]

Also important to note that due to anti-abuse algorithms, unless there is an obvious link between the primary card holder and the authorized user (such as a shared address), the chances of the card never appearing on their reports is definitely there.

Since Amex sets the date an AU was added as the account opening date, not only does an AU not inherit the account history but they would also receive dings for a new account reporting which would impact not only recent credit but also lower their average age of accounts.  If it is their only authorized user account, there is also a penalty for 0 AU accounts reporting a balance and a penalty for 50% or more of AU accounts reporting a balance, so either way a potential scoring penalty whether the card is at $0 or reports a balance.  If it is a revolving credit card (not Platinum, Gold, Green), there can be benefits by lowering overall utilization which depending on where the person is in that regard, can far outweigh the other penalties.  That would generally be the main benefit scoring-wise in the short term.  If it is a charge card, as no limit is reported the utilization help isn't there.

Many lenders will completely discard AU accounts for their underwriting decisions.  On the other hand, some lenders such as Chase will discard any positive aspects but also include balances from AU accounts in underwriting decisions.

[coolandcalm]

Hi, could you clairfy...

" If it is their only authorized user account, there is also a penalty for 0 AU accounts reporting a balance and a penalty for 50% or more of AU accounts reporting a balance "

Are you saying, If you add AU accounts to your file, to avoid scoring penalties, you must have more than 1 AU account, at least 3... 

and.. 1 of 3 AU accounts reporting a balance keeping it at 33% ???

[FireMedic1]

You should have 3 accounts on your own and a loan of some type reporting. One account reports <8.99%. All the rest $0. If its a revolving AU account. Its effect will be seen on the piggybacking file. Unless its a charge card. Theres no util % for those.