Cardholders' mistakes can bring down authorized users' credit score
'Piggybacking' on someone else's credit can be rough ride
By Jeremy M. Simon | Published: January 5, 2010
Credit Score Report
Dear Credit Score Report,
You wrote a couple of articles related to "piggybacking" in regard to FICO scores. The articles seem to be centered around using this practice to improve one's score. But how does having the "authorized user" account on one's report affect the FICO score if there are 30-day late payments marked on the account? I am an authorized user on one of my wife's accounts that has two 30-day late payments on it from about 1.5 years ago. I am trying to find out if it would impact my score to be removed as an authorized user and have the account removed from my credit reports. Any thoughts? She also has a low available balance on the account that may be impacting my score as well. Thanks in advance! -- Frank
Since you're an authorized user on her account, your wife's late credit card payments will hurt not only her credit score, but yours as well. Luckily, you can take action to erase the negative items from your credit report.
Getting yourself listed as an authorized user on a credit card account with a lengthy and favorable history can help your FICO score. That's because once you're on the card, the card's history will start appearing on your credit report. Depending on your circumstances, it can make you look as if you've been handling credit wisely for much longer than you actually have. That makes you appear less risky to lenders, thus improving the chances that you will get approved for that card, car loan or mortgage -- and with decent terms.
But there's a flip side -- as you're having to discover the hard way -- because your credit score can also suffer when the primary account holder makes a mistake. In your case, your wife's account includes two critical errors. But, in most cases, by contacting her bank, you can distance yourself from your wife's credit slip-ups and allow your credit score to recover.
On the scale of credit mistakes, your wife's blunders were pretty serious. "Having late payments on your credit reports is the single most damaging thing you can have, other than bankruptcies, repossession or collection accounts or judgments," says Jose Rivas, a financial educator for Consumer Credit Counseling Services of San Francisco.
But, as the authorized user, how will her mistakes impact you? As you are probably aware, banks report authorized users' account information to the three major credit bureaus. Once they have that information, Equifax and TransUnion list both the positive and negative information from shared credit card accounts on authorized users' credit reports, while Experian only includes the positive data from those accounts. Later, when a snapshot of your credit report is used to generate your credit score, the FICO credit scoring model considers all your account information -- whether you're the primary account holder or just an authorized user. That means your wife's late payments are also likely to hurt your credit score.
I'm guessing that your concern, Frank, is that taking yourself off your wife's account will shorten your own credit history. But in this case, it's the less damaging option: While FICO's credit scoring formula does consider the length of credit history, that factor is weighted much less heavily than a record of on-time payments. Additionally, because your wife's late payments are relatively recent, they are more damaging than they would be if they had happened more than two years ago. That's because negative items on a credit report have less impact on a FICO score as time passes. Of course, that also means that if both of you behave responsibly with credit from now on, your credit scores will eventually recover from that damage -- if you are willing to wait it out.
If, however, you are considering applying for a loan or a new job in the near future, you'll want to take immediate action to minimize the damage to your FICO score. To do that, you'll need to get in touch with your wife's card issuer.
While you don't mention which bank issued her credit card, the chart below -- reported by CreditCards.com senior writer Connie Prater -- gives you an idea of how several major issuers treat the process of removing an authorized account user.
|Decline the ride: Rules of major card issuers for removing authorized users
|Credit card issuer||How to remove authorized users from accounts||How long does it take?||Who can make request?|
|American Express||Write or call||Up to 24 hours after request is received||Either primary cardholder or authorized user|
|Bank of America||Write or call||Immediately||Either primary cardholder or authorized user|
|Capital One||Write or call||Immediately||Either primary cardholder or authorized user|
|Chase||Write or call||Immediately||Either primary cardholder or authorized user|
|Citi||Write or call||Immediately||Either primary cardholder or authorized user|
|Wells Fargo||Call and then put request in writing||Not final until written request is received||Either primary cardholder or authorized user|
|To reach a credit card issuer, call the toll-free number listed on the back of the card.
In most cases, either the primary cardholder or the authorized user can simply call or write the issuer to make the request and the removal of his or her name from the credit card account will take effect immediately. However, as the piggybacker, it may take longer for your wife's credit card account to come off your credit report. For example, Experian has said it could take 30 to 60 days to be removed. (You can, however, attempt to speed up the process by contacting Experian, Equifax and TransUnion directly.) Regardless, you'll want to ensure that the credit card issuer stops sending information on you (as the authorized user) to all three credit bureaus. That's why you should go ahead and contact your wife's bank to make the necessary request.
At the same time, to help her credit history, you can also add your wife as an authorized user on any credit cards you have maintained for some time and always paid off. That way, your consistent and responsible payment behavior will benefit both your credit score and your wife's, too.
Unfortunately, there's no quick route to achieving a high FICO score, and removing yourself from your wife's account may mean that your credit history gets shortened somewhat. However, if you behave responsibly with credit over time -- always making payments on time, keeping balances low and only taking on new debt when necessary -- you will eventually build a solid credit history and have the FICO score to prove it.
See related: Piggybacking gets clemency from FICO, FICO reveals how common credit mistakes affect scores, How fast does your credit score recover from your goofs?, Credit checks for job applicants become more common, Piggybacking, meant to jump-start credit, can backfire
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