Adding a person as an authorized user does not normally trigger any kind of inquiry on the account holder because this is not adding new credit.
Dear Keeping Score,
My mother is willing to add me as an authorized user on her credit card to help boost my credit. I don’t plan on having the card or charging on it.
My mom’s concern, as she is looking to buy a home in the near future, is if by adding me as an authorized user will her credit score drop just for adding?
I can’t see a hard inquiry would be done on her just for adding and can’t think of another reason why her score would even dip even a point. And when she called a couple of her credit companies they couldn’t answer the question. Please help! – Moe
I have generally good news for both you and your mother. Adding you as an authorized user to her card may indeed give your credit a boost, especially if your credit file is thin.
And it will help you if your mom’s credit record is a good one. Before you go ahead, I suggest you get a copy of your credit reports and credit scores and your mother’s as well. Just because you have a thin file doesn’t mean you have a low credit score. If you find your score is in the 700s, you may want to think twice before you go forward.
Authorized user activity vs. primary holder activity
Adding a new credit instrument such as a secured card for which you are personally responsible will have more of a positive impact on your credit than being an authorized user. While all the major credit card issuers report authorized user activity (some retail cards may not), the scoring elves count the activity as less positive than credit for which you are responsible.
But what you are proposing should not drag her score down in the vast majority of cases – even a point as you said. Adding a person as an authorized user does not normally trigger any kind of inquiry on the account holder because this is not adding new credit.
The exception to the rule is if your mom’s credit is damaged, she has added other authorized users to her account already or she has a borderline credit score. This activity could cause the creditor to do an account review or possibly treat the request as a new account application.
An account review could generate a soft inquiry, which has no scoring impact. But if the request is treated as a new account inquiry, there may be a hard pull, which would have a small and temporary impact. If your mom’s credit is solid, no problem. If not, then it depends on the policy of the lender in question.
How to keep both of your credit scores intact
While your mom has her credit report, ask her to check the credit history on the account you are planning to share in addition to the card’s utilization percentage. If there is any negative information on the file, or the card has a high utilization rate, your score may be negatively affected.
I have seen many good intentions go awry over the years I have spent advising people on getting their credit back on track. Be aware that if for any reason your mom charges a bunch one month and ups her utilization or forgets a payment or doesn’t make one for any reason (even a good one) your credit will take a hit. And if your file is thin, the impact will be greater on your score than hers.
I believe you are making a smart decision by not planning on using the card or even having one. This is often overlooked in the process when deciding to add someone as an authorized user. Nothing says the authorized user ever has to use it, and it’s often best for all parties concerned if it is never used. This way there will be no misunderstandings or misuse of the card.
Misuse of the card is a frequent way that an authorized user could affect the owner’s credit score. For instance, if you were to rack up a significant charge that would put the account at too high a threshold relative to its credit limit, that would definitely be bad for your mother’s score. But no need to worry, since you don’t plan on doing that!
Other ways to build your credit on your own
As for your score, being added as an authorized user will help but, as I mentioned earlier, you should also look into ways of building some credit of your own. Retail store cards are generally easier to qualify for, but be aware that the interest rate will be high. However, if you use the card responsibly and pay your balance in full each month the interest rate won’t matter.
You could also look at a secured credit card or a passbook loan, both of which will require a deposit of your own as a guarantee.
Lastly, don’t forget that the best way to a good FICO score is to pay all your bills on time, reduce debt on your credit cards as much as possible and only apply for new credit when you need it. This is the very best thing for both your score and your overall financial wellbeing. I wish you and your mother good luck.
Remember to keep track of your score!