Does adding an authorized user lower your credit score?
Adding an authorized user to your credit card account can be a strategic move, especially if you’re looking to improve your own credit score. However, the impact on your credit score can vary depending on several factors. In this article, we’ll explore how adding an authorized user can affect your credit score and when it might be beneficial to do so.
Understanding Credit Scores
Before diving into the impact of adding an authorized user, it’s essential to understand how credit scores work. Credit scores are numerical representations of your creditworthiness, calculated based on various factors, including payment history, credit utilization, length of credit history, types of credit used, and new credit accounts. The most commonly used credit scoring models are FICO and VantageScore.
How Adding an Authorized User Can Affect Your Credit Score
Adding an authorized user to your credit card account can have both positive and negative effects on your credit score. Here’s how:
1. Positive Impact: If the authorized user has a good credit history and manages their credit responsibly, adding them to your account can positively impact your credit score. This is because the authorized user’s positive credit behavior, such as on-time payments and low credit utilization, will be reflected in your credit report. As a result, your credit score may improve.
2. Negative Impact: On the other hand, if the authorized user has a poor credit history or mismanages their credit, it could negatively affect your credit score. The authorized user’s negative credit behavior, such as late payments or high credit utilization, will be reflected in your credit report, potentially lowering your credit score.
Other Factors to Consider
In addition to the authorized user’s credit behavior, several other factors can influence the impact on your credit score:
1. Age of Credit History: The longer your credit history, the better it is for your credit score. Adding an authorized user with a longer credit history can help improve your own credit score by increasing the average age of your credit accounts.
2. Credit Utilization: The amount of credit you use compared to your total available credit is a significant factor in your credit score. If the authorized user’s credit utilization is low, it can help lower your overall credit utilization, potentially improving your credit score.
3. Types of Credit: Having a mix of credit types, such as credit cards, loans, and mortgages, can positively impact your credit score. Adding an authorized user with a different type of credit can contribute to a diverse credit mix.
Conclusion
In conclusion, adding an authorized user to your credit card account can have both positive and negative effects on your credit score. It’s crucial to consider the authorized user’s credit behavior, age of credit history, credit utilization, and types of credit when deciding whether to add an authorized user. If you choose to add an authorized user with a good credit history and responsible credit behavior, it can potentially improve your credit score. However, if you’re concerned about the potential negative impact, it may be best to avoid adding an authorized user to your account.
