Adding Authorized Users on Credit Card

Spotlite · Mar 18, 2018

Last year I added both of my kids as Authorized Users to do two things; teach them how to responsibly use a CC and not abuse it, and establish some credit. We have been monitoring their credit and it’s showing activity as an Authorized User, but I’m curious as how creditors actually view this. Is being an Authorized User just as good as having your own account?

JustUs4All · Mar 18, 2018

I am not certain but would think not since creditors are more interested in a persons propensity to make payments not charges.

bassboy1 · Mar 18, 2018

To the best of my knowledge, it doesn't much affect their credit.

They don't have any legal obligation to the debt either. It's basically the same as you loaning them your card to go purchase something.

Spotlite · Mar 18, 2018

Thanks. Sort of what I was afraid of but it does show sone activity for them, not sure how much that will help them. If nothing else, it did help teach them how to be responsible and not abuse it.

KyDawg · Mar 18, 2018

Personally, I dont think it is a good idea at all to get kids started on Credit Cards.

Spotlite · Mar 18, 2018

KyDawg said:
Personally, I dont think it is a good idea at all to get kids started on Credit Cards.

I agree but to s certain extent, but mine are 20 and 21 now. I added them at 19 and 20.

Both have their own bank accounts and have had debit cards compromised more than once.

This has eliminated that. Plus they were taught to treat it as a debit card, when they make a purchase, show it as “pending” in their bank log book. Every Saturday they make one transaction from their bank account to pay for what they purchased that week.

shdw633 · Mar 18, 2018

Have them apply for their own card, so sign if you want to or go to the bank they have an account in and try to open one up there. Usually the banks have a starter card that you hold $500 in an account and the card has a $500 limit. This allows them to build credit even though the bank has their money should they default on the card.

Spotlite · Mar 18, 2018

Tried that with our local bank. Did not offer starter loans. Called several little finance companies about starter loans or co-signing and was told not offered. Our local bank actually the ones that suggested to add them to my CC’s as a start and wait one year. My oldest just opened her first little loan this week without a co-signer so she would have a payment history starting to establish. Having zero credit and no where to start other than high interest loans is not where I wanted them to start. What we’ve done send to be working until they’re finished with college.

JustUs4All · Mar 19, 2018

I started with a Gulf oil credit card in college. It was only good at Gulf stations and I paid it off religiously monthly.

A small loan at the local bank will work but only if it is reported to the credit agencies.

shdw633 · Mar 19, 2018

Spotlite said:
Tried that with our local bank. Did not offer starter loans. Called several little finance companies about starter loans or co-signing and was told not offered. Our local bank actually the ones that suggested to add them to my CC’s as a start and wait one year. My oldest just opened her first little loan this week without a co-signer so she would have a payment history starting to establish. Having zero credit and no where to start other than high interest loans is not where I wanted them to start. What we’ve done send to be working until they’re finished with college.

Have you checked with credit unions. That's how I got my credit started was with signature loans, course that was 40 years ago, but I do think they are a little more flexible with members then banks. I got my daughter started with a Discover card, don't know if you tried that one yet.

Jim Baker · Mar 19, 2018

Pretty should that authorized users do not get a FICO score.

Put the minimum amount for a CD at your bank in her name and yours. Then have her borrow against it for a loan with monthly payments. The bank can only charge you 2% above the CD rate. (at least use to be the rule) The same bank probably offers a credit card. Have her apply.

This is how I started my sons credit.

jrickman · Mar 19, 2018

I have 3 accounts with authorized users on them. All three show up on the authorized user's credit report exactly like it does on mine.

jrickman · Mar 19, 2018

In my recent experience, most lenders don't even view the report anymore. Computers compare the score and profile against some predetermined criteria and spit out a yes or no. The exceptions here, of course, are large loans like mortgages or a small business line of credit, where you have a loan officer and actually meet with them or at least can get on the phone with them and discuss things directly.

Spotlite · Feb 21, 2019

Update on this.......after adding them as authorized users it does affect their credit. They’re both receiving credit for having a credit card. It shows the activity payment exactly the way it shows on my report and does not differentiate with who’s responsible for the payment.

My son recently bought a house with a 745 score. My daughter has a 750. They had no activity and couldn’t buy a $200 TV from a furniture store before adding them as users. To add a little mix and longevity to their credit, both bought their own CD”s at the bank ($3000 each), used the CD’s as collateral to borrow $3000. The loan is a 4% interest rate but the CD”s are earning 2.3%......they’re getting credit for having a bank loan and their credit report was never pulled since they’re putting up 100% of the collateral. The money they borrowed is just sitting in a credit union savings club earning interest.

Now both are well established with good credit without having to deal with high interest starter loans.

westcobbdog · Feb 21, 2019

Spotlite said:
Last year I added both of my kids as Authorized Users to do two things; teach them how to responsibly use a CC and not abuse it, and establish some credit. We have been monitoring their credit and it’s showing activity as an Authorized User, but I’m curious as how creditors actually view this. Is being an Authorized User just as good as having your own account?

Spot I would suggest a secured card with maybe $200-300 dollars on it for your young adults.
Let them pay a bill on it and thus build credit. Just took a class from a lady who has a masters from Dartmouth and consumer credit is her thing. This girl could name many of the 54 credit algorithms and how each effects your scores in diff ways and gave plenty of do's and don'ts....she said she liked a card called "Opensky" for this purpose.

j_seph · Feb 21, 2019

My dad got mine started by co-signing on a loan when I was younger for something I really wanted.

Adding Authorized Users on Credit Card

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