Will It Really Help FICO Score to Be An Authorized User?

[OptimalFICO]

My fiancee's BK was discharged 7 years ago. His FICO scores have been hovering 10-15 points below 700 for a few years now. He is being hurt by a lack of available credit. He has zero debt. For the past four years he's had an Orchard Bank MasterCard with a current limit of $2,500. We just got him approved for an Alliant Credit Union Visa for $3,000.

My FICO scores are above 800. Will it significantly improve his score if I add him as an authorized user to m AmExp Blue with a credit limit of $20,000? Is there any downside for me? For example, will this ding my FICO score or show up in any way?

Thanks!

[Travis-84]

If you add him, it won't do anything to your score.

Assuming that account is positive it will help him, but if you miss a payment or anything like that, it will hurt both your scores.

[MarineVietVet]

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@OptimalFICO wrote:

My fiancee's BK was discharged 7 years ago. His FICO scores have been hovering 10-15 points below 700 for a few years now. He is being hurt by a lack of available credit. He has zero debt. For the past four years he's had an Orchard Bank MasterCard with a current limit of $2,500. We just got him approved for an Alliant Credit Union Visa for $3,000.

My FICO scores are above 800. Will it significantly improve his score if I add him as an authorized user to m AmExp Blue with a credit limit of $20,000? Is there any downside for me? For example, will this ding my FICO score or show up in any way?

Thanks!

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It can help him IF the account is older than any of his, 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. He 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.

One possible downside is if you give him access to a card and he runs up charges. I'm not at all saying that might happen but AU's have authority to charge on the card but are not responsible for any repayment.

From a BK years ago to:

9/09 EX pulled by lender 802
3/10 EQ- 800
4/10 TU -772

You can do the same thing with hard work

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[OptimalFICO]

Thank you. Yes, the account is older than any of his (since 1991), the payment history is long and clean and the utlization is very low. I'll have to call AmExp and ask if they will report it to all the CRAs but I would be inclined to think so. He's been outstanding with his credit since the BK (It was his exwife actually who had the problem before).

BUT what I was thinking is that I would add him as an authorized user for like six months to get my card history added as part of his credit history -- and then have him apply for his own AmExp or other major credit card and increase his existing credit limits.... and then cancel the card (just in case).

Any thoughts?

[MarineVietVet]

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@OptimalFICO wrote:

Thank you. Yes, the account is older than any of his (since 1991), the payment history is long and clean and the utlization is very low. I'll have to call AmExp and ask if they will report it to all the CRAs but I would be inclined to think so. He's been outstanding with his credit since the BK (It was his exwife actually who had the problem before).

BUT what I was thinking is that I would add him as an authorized user for like six months to get my card history added as part of his credit history -- and then have him apply for his own AmExp or other major credit card and increase his existing credit limits.... and then cancel the card (just in case).

Any thoughts?

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You can remove him and add him back as often as you'd like. That's not a problem.

[RobertEG]

My first caution.  You can add an AU without giving them a credit card for their use under the account.  If you let them have a card, their usage can post to your account, and it can burn you.

Second caution.  Some CCCs dont accept AUS, and some, even if they do, might not report to all CRAa.  Benefit will only be obtained if they report to the CRA that is doing the scoring.  Do some prior investigation with your CCC.  Some CCCs will only accept and report  AUs if they are immediate family members.

Third caution.  If he relies on the inflated FICO score due to the AU authorization, and applies for tuture credit, and the credtitor looks only at FICO score, then it will be a clear benefit.  But if they do a manual review of his CR, they know the game, and will know that his FICO score is not a true reflection of his personal credit risk.  So they may discount it.

[creditninja9000]

I'm pretty sure this is how my brother ended up with 5k limit card with chase. he was an au on my cards and I removed him and we had the credit bureau remove all the accounts since they weren't his a few days after this he called chase for something else or was in the branch. I can't remember but result, they offered him the card he didn't even apply.

[OptimalFICO]

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@RobertEG wrote:

Third caution.  If he relies on the inflated FICO score due to the AU authorization, and applies for tuture credit, and the credtitor looks only at FICO score, then it will be a clear benefit.  But if they do a manual review of his CR, they know the game, and will know that his FICO score is not a true reflection of his personal credit risk.  So they may discount it.

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Good point RobertEG. And though would likely be the case because of his BK, even though it's 7 years old, most creditors either decline credit due to the BK or manually examine the report.  I would assume this would especially be the case when he applies for a mortgage. Hmmm, food for thought.

Thanks to everyone else too for your input!