What to expect when you're made an authorized user on a credit card
You can give your teen a head start, but ultimately, credit's earned, not inherited
Credit Score Report
Dear Credit Score Report,
I have a credit score of 732. I am requesting my (very responsible) 19-year-old son be added as an authorized user on one of my Visa cards. One of the reasons is for emergencies. The other is to establish credit for him, since he currently has none. My question: Will he automatically have my credit score? If not, to what extent will having him as an authorized user affect his credit? Thank you very much. -- Brenda
Making your teenage son an authorized user on your Visa card will help him build a credit history, but don't expect him to automatically earn a good credit score.
Right now, your son doesn't have a credit history, which means there is no record of his borrowing behavior that can be used to generate a credit score. That isn't surprising since the law makes it difficult for young adults to get their own credit cards. By making your son an authorized user on your account, however, the credit history associated with that particular Visa card account will begin to appear on his credit reports -- typically following the end of the card's billing cycle, when the bank reports to the credit bureaus.
In some cases, that notation will be enough to generate your son's credit score: The widely used FICO score includes authorized user accounts in its score calculations, while the less-popular VantageScore doesn't always. (The original version of VantageScore doesn't automatically consider authorized accounts.) But even those credit scoring models that include the authorized account will likely award your son a lower credit score than the one you've earned for yourself through years of careful borrowing.
In other words, your son shouldn't expect to suddenly score a 732. "The son will not 'automatically have' the mother's credit scoring," says Rod Griffin, director of public education at credit bureau Experian, since your entire credit history won't appear on his credit report. Only that Visa card -- and its record of on-time payments -- will help your son's credit score, which is otherwise dependent on his own borrowing behavior. Negative items associated with that account, meanwhile, may hurt his credit.
Based on that authorized account alone, what kind of a credit score can he expect? It's impossible to know for sure. "There is no single answer to this question, as his initial score will depend largely on the payment history, credit utilization (ratio of balance to limit) and age of the account to which he has been added as an authorized user," says Barry Paperno, consumer operations manager for myFICO.com, in an email. (Your card account must have been open for at least six months in order to generate a credit score, FICO says.) "If all payments have been made on time and the credit utilization remains low, he can expect to start with a good score that should increase over time with continued on-time payments, low credit utilization and new accounts opened only when needed," Paperno says.
The authorized account will offer an excellent opportunity to teach your son about these fundamentals of good credit. Explain to him how you've borrowed responsibly over the years in order to build your good credit history. It's not an overnight process.
With the foundation you're creating through the authorized account and your good example, over time, your son should be able to build a strong credit history and credit score -- just like his mother.
See related: Piggybacking, meant to jump-start credit, can backfire, Parents' 5 other card choices for college-age children, Cardholders' mistakes can bring down authorized users' credit score, Authorized user or joint account holder?, Credit card authorized users, joint account holders differ, Credit card reform law and you
Jeremy M. Simon is a former CreditCards.com reporter who wrote about credit scoring, economic data, credit card crime and other issues. He is based in Austin, Texas. He is a graduate of Vassar College and has previously worked for Thomson Financial in New York City, where he wrote about the stock markets, and Texas Monthly, as well as several publications in Austin.
Published: March 29, 2011