Credit File benefits for an Authorized User??

[vanillabean]

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@newhis wrote:

I added my daughter to my new cards in USA when she was 16 (Amex and others), so all report as open since she was 16. Her score is 770 and got her first card with good limit for stated income, more than what we imagine. So no need to add your 3 year old kid to your cards. 15 years old is more than enough to build good credit score and some history, that not all lenders count. I'm sure my daughter could not get a Chase or Citi card right now, but in a 9-12 months I'm sure she can get them.

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I dunno. As a youngster, I may feel like having missed the chance to find out for myself.

[Cheryla18]

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@Anonymous wrote:

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@Cheryla18 wrote:

I am thinking about adding my 20 yr old daughter as a Authorized user to my Cap One card.   How if any will this help improve her Credit Score. 

Cheryl

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Nobody can answer that because we don't know enough information about the account.  If there are any lates associated with that account, it will harm her score.  If the utilization on that account is high, it will harm her score.

Furthermore, if the card is fairly new (< 3 years in age) then while it won't hurt your 20 year old daughter's score, it won't really help it either.

So what you want to be doing is adding a card that....

      Has no derogs in its history

      Usually reports $0 or a very small balance (or you could make it report this going forward)

      Is at least 5 years old (the older the better -- 10 or 15 years would be even better)

Does this card meet all three of those criteria?

Does your daughter have any accounts on her report yet?

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It is a brand new card.   I got it Monday. 

[Anonymous]

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@Cheryla18 wrote:

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@Anonymous wrote:

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@Cheryla18 wrote:

I am thinking about adding my 20 yr old daughter as a Authorized user to my Cap One card.   How if any will this help improve her Credit Score. 

Cheryl

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Nobody can answer that because we don't know enough information about the account.  If there are any lates associated with that account, it will harm her score.  If the utilization on that account is high, it will harm her score.

Furthermore, if the card is fairly new (< 3 years in age) then while it won't hurt your 20 year old daughter's score, it won't really help it either.

So what you want to be doing is adding a card that....

      Has no derogs in its history

      Usually reports $0 or a very small balance (or you could make it report this going forward)

      Is at least 5 years old (the older the better -- 10 or 15 years would be even better)

Does this card meet all three of those criteria?

Does your daughter have any accounts on her report yet?

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It is a brand new card.   I got it Monday. 

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Does your daughter have any accounts on her report yet?  Also, do you have an older (but clean) card you could add her to, instead of the one that is just a few days old? 

[Anonymous]

Just another side question for CreditguyinDixie

Seems like you would have the answer to this one - 

does the credit limit matter at all? would it be more beneficial to be added to a older card or a newer card with high limit? 

[Cheryla18]

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@Anonymous wrote:

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@Cheryla18 wrote:

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@Anonymous wrote:

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@Cheryla18 wrote:

I am thinking about adding my 20 yr old daughter as a Authorized user to my Cap One card.   How if any will this help improve her Credit Score. 

Cheryl

---

Nobody can answer that because we don't know enough information about the account.  If there are any lates associated with that account, it will harm her score.  If the utilization on that account is high, it will harm her score.

Furthermore, if the card is fairly new (< 3 years in age) then while it won't hurt your 20 year old daughter's score, it won't really help it either.

So what you want to be doing is adding a card that....

      Has no derogs in its history

      Usually reports $0 or a very small balance (or you could make it report this going forward)

      Is at least 5 years old (the older the better -- 10 or 15 years would be even better)

Does this card meet all three of those criteria?

Does your daughter have any accounts on her report yet?

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It is a brand new card.   I got it Monday. 

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Does your daughter have any accounts on her report yet?  Also, do you have an older (but clean) card you could add her to, instead of the one that is just a few days old? 

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She has a auto loan that  I co signer on. No Credit cards.  I am rebuilding so this is my 1st Major credit card. I have 2 store cards that are almost 6 months old

[Anonymous]

Given that she has no credit cards of any kind on her profile, I think adding her as an AU to the new card will probably help her.

But it's important that you keep the utilization very low on it.  That means in practice making two payments a month on it.  4-5 days before the statement prints, you'll want to pay the card down to a very small amount, like $10.  Then 4-5 days after the statement prints, you'll need to pay whatever was on the statement in full.  If you can get into a roll of always making those two payments, then you'll help both your score and hers.

After she has had the auto loan for 7 months, and after the credit card has been appearing on her report for a couple months, she should begin looking to get a credit card of her own.  Discover tends to be very friendly to young people with clean profiles. 

Once she has a credit card (or two) of her own, you should remove her as an AU.  Making your son or daughter an AU is a trick that is only really helpful when the card to which the kid is being added is very old.  In her case, because the card is so new, it will only help her for as long as she has no cards of her own. 

[Anonymous]

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@Anonymous wrote:

Just another side question for CreditguyinDixie

Seems like you would have the answer to this one - 

does the credit limit matter at all? would it be more beneficial to be added to a older card or a newer card with high limit? 

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FICO does consider the size of one's credit limit as a scoring factor.  For example, suppose you have two guys, Bob and Fred.  Both have three credit cards, both have a 7% utilization, both have the same age of accounts, both have no derogs, etc.  The only difference is that Bob's cards have a $1000 credit limit each, and Fred's have a $20,000 credit limit each.

Both guys will have exactly the same score.  Fred gets no extra points for having creditors that give him big credit limits.

Someone might say that Fred's big limits give him a lower utilization.  This is not true, however.  A college student with one card that has a mere $300 credit limit can spend over $1000 a month on his card and still have a 1% utilization.  The way to control your utilization is by controlling your spending and by timing your payments -- not by trying to get big credit limits.  (I am not against someone making a mild effort for credit limit increases, but only for issues of convenience, not as a strategy for lowering utilization.)

In brief, utilization is under your control -- how old your accounts are is not under your control.  Therefore it makes sense to give your kid a very old card and then keep the dollar value that it reports very low.  That way the kid gets the best of both worlds.