Tradeline and authorized user? What the credit bureaus think
When talking about credit, one of the biggest uncertainties people have about it is how to repair credit and how to build credit. The truth is that everything related to this topic is of great interest to users. But when it comes to credit there are many points to take into account.
But, most likely, at this point you will be interested in knowing the point of view that credit agencies have towards tradeline and authorized users. Here are some more details.
In case you didn’t know, an authorized user is someone who is added to another person’s credit card account. The authorized user has the same spending rights as the cardholder, but has no payment or debt liability. Almost all major credit card issuers will allow their major credit card holders to add authorized users to their accounts.
The big benefit of being an authorized user is that most credit card issuers will report credit card account history to the credit bureaus, which are: Equifax, Experian and TransUnion.
Not only will lenders see the account on their credit reports, but credit scoring systems will also consider it when calculating their credit scores.
All credit scoring systems will consider an authorized user account or tradeline as a scored attribute. In English, that means that if you are an authorized user on someone else’s credit card account and that account reports or provides that information to the consumer credit reporting agencies and ends up on their credit reports, then it will be considered in the calculation of your credit score.
You should know that an authorized user credit card account is treated no differently than if you were the primary cardholder. The balance, credit limit, age of the account, and payment history of the account would not be treated any differently.
If all of those attributes of the credit card say good things about your credit it is likely that the card will help your credit points, since that is what you are looking for. On the other hand, if the card is mismanaged, chances are you will also suffer a credit score hit, as will the primary cardholder.
This is why it is recommended that you enter into this type of partnership with someone responsible and with good credit discipline.
And, remember; lenders like to see positive information on credit reports and that has nothing to do with your credit scores.
Blog, Issue 6