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Information on credit reporting for authorized user

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

My fiance has bad credit due to his ex-wife whom racked up credit card debt when they were together without his knowing. They ended up filing for bankruptcy during the divorce. I would like to help him rebuild his credit. My credit scores are around 800. If I have his name added to my credit cards (most with low or no balances). Will this improve his credit score faster? And as long as the payments are made on time every month, will this drop my credit score significantly by simply having his name added? How will this affect each of our scores? Thanks.

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Bill's Answer
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Bills.com | Find Learn Save

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

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11 Comments

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  • BA
    Jun, 2010
    Bill
    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.
    0 Votes

  • 35x35
    Jun, 2010
    Roni
    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.
    0 Votes

  • BA
    Mar, 2010
    Bill
    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.
    0 Votes

  • SN
    Mar, 2010
    sami
    My x defaulted and filed bankcrupcy.I was an authorized user my credit got affected. can you help me
    0 Votes

  • BA
    Dec, 2009
    Bill
    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.
    0 Votes

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