Being An Authorized User Hurt My Credit Score

Most people don't think about their credit score until they need a loan. After applying it is usually too late to make significant improvements to your score. You are stuck with the interest rate offered, or you may leave the deal.

I've had a mortgage for 15 years, but as the family grew, it was time to build a bigger house. We found a great fixer-upper in the neighborhood we've always wanted to live in. Everything lined up - until I applied for a new loan.

I have excellent credit. I have been using credit cards responsibly for 20 years, paying only a day or two late, several times. I have financed two new cars over the years, but drive my reliable and non-cash Toyota 2007. I thought I would qualify for the best rates, no problem.

I Am An "Authorized User" On What?!

I like dealing with finances, bills, investments, taxes, everything, but my wife couldn't be more different.

Years ago she added me as an authorized user on her credit card account. I guess I said ok, but there's a good chance I played NHL 09 and didn't hear a word she said. Yes, Dion Phaneuf was on the cover this year. Good times!

The lender asked me about the account and said it would drag my credit score down.

As it turned out, a few years ago there was a 60-day delay in payment on the account. The penalty was the full cost of the loan. Fortunately, the lender said that we could remove me as an authorized user and get a "quick revaluation" to exceed my score.

Friends With Benefits And Liabilities

Adding spouses and young adult children as authorized users have long been an applied strategy to establish good credit card habits. It can also help them establish a presence at credit bureaus.

There is clearly a downside to being an authorized user. If the account holder has a negative action, this can be passed on to the authorized user as a lower credit score.

Bottom Line

Access your credit reports regularly and don't just rely on "free" scores. Before applying for a loan, the only way to make sure you get the interest rate and terms you deserve is to make sure you're getting the credit you deserve.