Being an Authorized User Hurt My Credit

Posted March 13, 2020 by Craig Jenkins in

Most people don’t think about their credit score until they need a loan. After applying it’s usually too late to make significant improvements to your score. You’re stuck with the rate offered, or you can walk away from the deal.

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

I have excellent credit. I’ve used credit cards responsibly for 20 years, only being a day or two late on payments a handful of times. I’ve financed two new cars over the years, but drive my trusty, and payment-free, 2007 Toyota. I figured I would qualify for the best rates, no problem.

I’m an “authorized user” on what?!

I like handling the finances, bills, investments, taxes, everything. My wife on the other hand, could not be more different. We have some separate accounts.

A long time 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 was playing NHL 09 and didn’t hear a word she said. Yes Dion Phaneuf was on the cover that year. Fun times!

Fast forward to this past Monday. The lender asked me about the account and said it was dragging my credit score down. What!?

Turns out there was a 60 day late payment on the account a few years ago. The penalty was a full point in costs for the loan. Luckily the lender said we could remove me as an authorized user and get a “rapid re-score” to bump my score.

Friends with benefits and liabilities

Adding spouses and young adult kids as authorized users has been a long used strategy to help establish good credit card habits. It can also help them establish a presence with the credit bureaus. However, these benefits don’t always show up on all credit scores or reports.

Clearly there is a downside to being an authorized user. If the owner of the account has a negative action, that can pass on to the authorized user as a lower credit score.

The Bottom Line

Access your credit reports regularly and don’t rely solely on “free” scores. Getting your credit ready before applying for a loan is the only way to ensure you’re getting the rate and terms you deserve.