Authorized User Advice

[Anonymous]

Hi all, newly registered but been lurking for a while.  I am currently 21 years old and in college.  When I first entered college, my parents put me down as an authorized user on their CSP card.  In May of this year, I received an offer from Citi for their DC card; I applied in June and was approved.  As we all know, credit utlization should be kept relatively low, anywhere from 1-20%.  Because I am an authorized user and I now have my own card, my total revolving credit limit is northbound of $40k.  I only spend about $200-300 a month on my card which means my debt to credit utilization is somewhere around 0.7%.  As it is not a significant number, there is no way of telling if it is holding my credit score back or doing no damage.  My question now would be, is it wise to have the authorized used dropped or keep it? I understand that my whole credit length/history could be adversely affected.  Thanks for all the responses!

[Anonymous]

You are wise to see that anyone can keep his CC utilization at a very low level, as long as he has one card in his own name -- he doesn't need an AU card to have low U.

The way that the AU card might be giving you a big help is with account age ("age of oldest account" and "average age of accounts").  I say might because the AU card also may not be helping you much.  It depends a lot on when that AU card was opened.  You should have copies of your credit reports.  How does tthe "Date Opened" read for that account?  (That's not the same as the date your parents added you as an AU.)

The folks here can't really give you good advice until you tell them how old that account appears to be as it is listed on your reports. 

Another thing people here would benefit from hearing is how many other accounts you have.  My guess is that your reports have exactly two open accounts on them (your Citi card and the AU card) and no closed accounts.  Is that right?  Do you have any student loans?  If so, do they appear on your credit reports right now?

You are doing a good thing which is you are trying to develop a plan.  Having a plan is really important.  Dropping the AU card should be a definite part of the plan down the road, but it might not be for a while or it might be soon.  Part of the plan should be assessing what your needs might be for credit during the next three years.  Another key part of the plan should be slowly find three cards that you can imagine keeping for a long time and making them part of your profile.  The Citi DC is a wise choice.  Because of the Chase 5/24 rule, you should consider whether any Chase cards are ones you like.

[Anonymous]

The age of the AU account is just shy of 15 years thus making my average account age 4 years old. I also have student loans as well, 4 open accounts (all deferred) and 1 closed account that show up on my credit report.  I currently have most of my liquid assets with Chase and have already talked to a banker about opening a credit card with them.  My plan is to keep my Citi DC card as well as open a Chase Freedom card and Chase Sapphire, no less than 9 months down the road for the first one.

[Anonymous]

You sound like you are really putting together a plan which is the most important thing of all.  I.e. intentionally considering goals and how different steps would (or would not) help you, and then choosing the steps and the timeframe.  All great stuff.  And secondarily, I think the actual details of your plan sound smart too.

If it were me, I'd make keeping the AU a part of my plan for the next few years.  It is giving you a really strong boost to a factor called "age of oldest account" -- which will be a benefit undiluted by the various accounts you have and will be adding.  It is also helping significantly with AAoA, though as you get more and more accounts, it's impact will be less.

With any AU account you should analyze the owner and that account's history as part of your choice to keep it.  If you feel like the utilization on that card tends to be very low and the owner has safeguards in place to prevent a late from occuring, that's a strong argument for keeping it.  Late payments can be dealt with if they happen by asking to be removed as an AU, which would remove the lates from your report, but some people experience that getting removed can take a while (depending on the card owner and the card issuer, etc.).

A reasonable choise given what you have described is to keep it for the next two years -- you'll have your own cards and may have gotten a car by then as well.

Your plan to get a Chase Sapphire Prefered is fine, but bear in mind the high annual fee.  It's a card that really rewards people who are travelling a huge amount, which may not be the typical young person just out of school.  But at this point I am getting away from the question you asked for about an AU.

Very best of luck...

[Anonymous]

CreditGuy, thank you so much for the advice!  The AU is indeed a part of my plan for the next few years, its really just a matter of timing.  I feel that either end of the spectrum could potentially benefit me in the long run.  Either keep it on longer term so my other revolving accounts can gain age or drop it as soon as possible to mitigate the effects and build from ground up.  As per EquiFax, I have a score of 721 this past month and I feel the only real inhibitor are the 4 student loan accounts.

As for future plans, I do not want to jump the gun but I would preferrably like to keep the number of credit cards I have to a max of 3.  Citi DC and Chase Freedom will be my staple when I get it.  As for the CSP, I want to make travel a goal of mine however as you stated, someone fresh out of college probably does not have the resources to.  In addition, I totally forgot about the $95 annual fee.  The CS card I am an AU under has no annual fee (grandfathered in perhaps?) so I have been under the wrong impression for a while.  Luckily, I have time on my side to shop around and for some particular reason, I seem to be extremely interested in credit and maximizing its benefits!

[Anonymous]

Regarding the Chase Sapphire and the Chase Sapphire Preferred, what you may want to look into is applying for the CSP and then downgrading it to a CS after one year.  That way you'd get the huge signup bonus but then would be able to keep the tradeline as a non-annual-fee account.  I believe that such an approach is still possible.  Applying directly for the CS is (I believe) not possible any more.

I had only three credit cards for a long time and my scores went up to the 840s, so three cards is a totally ok choice, especially given that you will have a number of other accounts.

Young people especially can benefit when they run across a massive signup bonus -- as long as they have your tough disciplined resistance to applying for every card they see.  There are some great offers out there.  Chase just released one that would be a really good candidate for a downgrade after one year.

There are some amazing bank promotions out there too.  I just opened a checking account with a $350 bonus, for example.  I make usually about $1200-1500 from bank account promotions every year.