Information on credit reporting for authorized user

READER QUESTION

If I have my fiance's name added to my credit cards will this improve his credit score faster?

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Bills.com Resident Expert
Dec 12, 2011
BILL'S ANSWER

A good way to use your positive credit to help improve your husband's credit profile would be to add him as an authorized user on several of your credit cards. This is commonly called "piggybacking."

Many credit card companies report their card payment histories on the credit reports of both the primary cardholder and any authorized users. Making your husband an authorized user will allow your positive credit lines to appear on his credit report and hopefully improve his credit score. Reporting accounts on the credit reports of authorized users is allowed by federal law, despite the fact that authorized users are not legally liable for the debts. The purpose behind this law was to assist women, who in the past had a very difficult time establishing credit independent of their husbands, to use their husbands' accounts to build their own independent credit profile.

In your case, the wife is trying to help the husband, but the effect should be the same. Before deciding the credit cards to which you wish to add your husband's name, I encourage you to contact the card issuers to discuss their policies regarding credit reporting for authorized users to make sure you choose card companies that will report the account histories on your husband's credit reports.

Please keep in mind that your husband's bankruptcy, which has a strongly negative impact on his credit rating, will appear on his credit report for ten years from the date of filing. Adding him as an authorized user on your positive trade lines may improve his score, but the bankruptcy may prevent him from achieving a good credit rating for several years. The more time that passes from the date of the bankruptcy, the less impact it will have on his score; hopefully the new accounts appearing on his report will help him rebuild his score over time. However, you should not expect a sudden jump in his credit rating simply by adding him as an authorized user on your credit cards.

Concerning your credit rating, adding your husband as an authorized used on your accounts should have no impact on your credit score. Your account information will appear on his credit report as an authorized user, but his derogatory items should not appear on your credit profile. If you are concerned about his negative credit affecting your credit rating, I encourage you to periodically review your credit report to make sure that none of his accounts are appearing improperly on your credit report. You can obtain a free copy of your credit report from each of the three major credit bureaus such as, Equifax, Experian, and TransUnion, once every twelve months by visiting AnnualCreditReport.com. I also encourage your husband to review his reports so he can dispute any inaccurate derogatory items that may be damaging his score. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

If you would like to learn more about credit, credit reporting, and credit scores, I invite you to visit the Bills.com Credit Help page.

I wish you the best of luck in you and your husband's efforts to rebuild his credit rating and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.Bills.com

Comments (10)


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Bills.com
June 10, 2010
Your perception of the rules surrounding credit reports is incorrect. Legal liability for paying a debt is separate and distinct from whether a debt may be reported on an authorized user's credit report. Let us assume for the sake of argument your spouse had stellar credit and you had mediocre credit when he made you an authorized user. His doing so increased your credit score. However, now that he has defaulted, your being an authorized user on the bad account will drag down your score. This, as I mentioned, is independent of your liability for the account.
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Roni .
June 09, 2010
If I am an authorized user of my ex-husband cards and he defaulted, will this affect my credit? If so, I thought as an authorized user you are not legally liable for it so therefore it should not affect my credit.
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Bills.com
March 23, 2010
Unfortunately, there is nothing I can do. However, if you are looking for information to learn more about how credit works I encourage you to visit the Bills.com Credit Help Information & Resources.
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Sami N.
March 23, 2010
My x defaulted and filed bankcrupcy.I was an authorized user my credit got affected. can you help me
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Bills.com
December 04, 2009
There is no quick fix to your situation or instant-credit solution of which I am aware. The "authorized user" issue used to be straight-forward: For better or worse, the authorized user got the benefit (or harm) from that account's history. In 2007, Fair Isaac Company, the creator of the FICO score, reversed that long-standing policy. In 2008 Fair Isaac Co. reversed its 2007 policy, and in 2009 it announced another refinement when it rolled out FICO 8, the latest edition of its scoring algorithm. The FICO 8 press release reads in part, "FICO 08 helps lenders protect against authorized-user account ‘piggybacking’ by incorporating new patent-pending technology that materially reduces the potential score impact associated with the abuse of authorized user accounts. By considering authorized user accounts in score calculations, FICO 08 continues to support lenders’ abilities to comply with federal regulations." In other words, if a potential lender is using FICO 8 software (the current version in 2009), and it encounters a consumer who is an authorized user on a spouse's seasoned and good-credit credit card, that user will get boost in their credit score. On the other hand, if a potential creditor is using FICO 8 software (the current version in 2009), and it encounters a consumer who is an authorized user on a seasoned and good-credit credit card owned by a non-spouse, that consumer's credit score will not be boosted.

I have no certain quick-fix for you. I suggest you go back to your bank and add your spouse as an authorized user to your credit card. Do the same with any other revolving credit cards you may have, such as a card from a department store or oil company. Hope the mortgage lender is using FICO 8 to determine your spouse's credit worthiness. Ask your spouse to apply for a secured credit card and for credit cards at department stores. Have your spouse use them and pay off the balances in full when due.
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Asit .
December 03, 2009
I added my wife as an authorized user because she didn't have an SSN till 2005. After that I informed the credit card co. of her SSN and got a verbal confirmation from them that she'll start getting a history. 4 years later - we apply for a mort. and the loan app is declined because she doesnot have any credit history. The credit card company backtracked on their promise. They are saying that being an authorized user will not give her credit history. So we are hosed. What are my options? How can I get fix this issue? We already have the house in contract ... financing is lacking bcos of this ... Please advise.
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Bills.com
March 01, 2009
I'm not totally sure what you are asking, but all creditors use the three primary credit bureaus for credit data. All credit card issuers also report to the three bureaus, although usually won't report on the authorized user's credit report since they are not really being extended credit or 'on the hook.'
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Danielle S.
Bridgeton, MO  |  May 23, 2011
Oh they will!I'm having the same issue with US Bank.They don't care if I was an authorized users or not! They want money from me!! When I told them about this law,they said to me " it is not a law"...
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Bills.com
May 23, 2011
A joint account holder is responsible for payments. An authorized user is not. This is not a state or federal law, it is written in black and white in the credit card issuer's contract.

Do not believe legal advice from a collection agent or a customer service representative at an original creditor. They have one job — collect payments. Legal advice from collection agents and customer service representatives is incomplete or wrong, and is always self serving. If the collection agent or customer service representative makes a convincing-sounding argument, consult with a lawyer who can review the credit card contract before paying the credit card issuer a dime.
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HENRY G.
February 27, 2009
WHAT CREDIT CARD COMPANYS REPORT AUTHORIZED USERS TO EQUIFAX TRANSUNION AND EXPERIAN....
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