Being an Authorized User is Hurting My Score?

[Queen_Etherea]

Hello Everyone!

So my dad added me as an authorized user on his credit card about 2 years ago. The limit is $16,000 and he now has $15,500 USED on that card. My credit utilization is otherwise good. I have two credit cards:  Wells Fargo secured credit card with a $1,000 limit and a Capital One credit card with a $300 limit and I keep them at about 30% used. All my accounts have 100% on time payment history. I do have a couple of things in collections that will drop off at the end of this year, but every time I look at my score, it says the biggest factor is that credit utilization. If my dad were to remove me as an authorzed user, would that help my score? It says that 95% of my credit is being used because of his credit card. It's not my oldest account, so I'm not too worried about losing some points from closing it. I'm just wondering if removing me is going to help me in the long run.

[Anonymous]

Yes.  CC utilization is a huge part of a FICO score.

[Anonymous]

That AU account is making up $16k of your total $17.3k in limits (93%).  93% of your total limits are maxed out.  You're incurring a harsh penalty for having a single account maxed out, but taking an even bigger hit because your aggregate utilization is > 90%+.  You're probably leaving 75-100 points on the table here by having that AU account; I'd get rid of it.  If your balances on your own $1000 and $300 cards are $0 or next to nothing, you'll see a major score improvement in dropping that maxed out AU account.

[Queen_Etherea]

Thank you! I noticed that every time I checked my credit score and history, it would say the biggest ding on my credit was my utilization. I already had my dad write the credit union a letter to remove me as an authorized user, so we’ll see how things pan out in the next couple of months.

[Anonymous]

Wise move IMO.

Do you have balances on either of your two credit cards?  If not (or if they are very low) you may be able to achieve soft pull CLIs on them once your AU account goes away.  Your overall utilization could drop from say 90% to 1%-28% (for example) which is a far better look risk-wise than you were showing with that AU account present.  Your lenders with which you have the $1000 card and $300 card could very well see your new less risky profile and be willing to give you CLIs, making those limits a bit more workable for you and aiding in continuing to keep your utilization low going forward.

[Queen_Etherea]

Yes, I have $75 on my $300 limit (Capital One) and $300 on my $1,000 limit (Wells Fargo). The Wells Fargo Card is a Secured card that I’ve had for well over a year and still haven’t graduated to unsecured even though I’ve been making payments on time and keeping my balances low. I’m guessing the card my dad has isn’t helping them graduate me, is it? My credit has been stuck in the 590 range for a really long time, so I’m eager to see my hard work pay off. My boyfriend has done the exact same thing as me and his score has already jumped to the 750 range.

[Anonymous]

The best thing you could possibly do for yourself is to pay off 1 card to $0 and allow that $0 balance to report to the bureaus while letting the other card report a balance of 8.9% or less.  That would be about $26 or less on your Capital One card, or $89 or less on the Wells Fargo card.  Ideally, a best practice to maximize score is to allow one to report $0 and the other a very small balance, say $5-$10. 

If you do this and that maxed out AU account comes off your credit report, I'm confident you'd see score gains in the ballpark of +100 points.

I also do believe the inability to unsecure your WF card is 100% related to your utilization problem.  Maxed out utilization is a high risk factor that dramatically weakens your profile and credit scores.  Eliminate that problem and your profile instantly strengthens significantly.  I see no reason why you wouldn't be able to unsecure that card within 30 days of rectifying this issue.

[Queen_Etherea]

You guys really are amazing! I always thought keeping all your cards 10%-30% utilized was the best thing to do. I'm going to try this last method described and see what happens. I don't NEED my credit cards to pay my bills or get things I want, I only have them to help my credit right now. I'm hoping to purchase my first house in the next couple of years.

[Anonymous]

Keeping your total utilization at 1% (up to 8.9%) is ideal.  If there's a certain card that you're looking to get a CLI on, sometimes it's recommended that you allow a 9%-29% balance to report, but still keep aggregate (overall) utilization at 8.9% or less. 

[HeavenOhio]

Welcome, @Queen_Etherea. 28.9% is considered to be responsible borrowing and generally falls into the second best scoring tier. 8.9% optimizes most people's scores, although some have reported slight point gains by keeping utilization lower.