Building credit score 2019 edition
June 16, 2019 10:49 PM Subscribe
Someone close to me is looking to rebuild their credit score after 10 years of never having credit cards. They mentioned setting up an authorized user, which I have heard of before. Does this still work in 2019?
A few datapoints for followup questions anticipated:
0. I actually have a good credit score, no missed or late payments, etc.
1. I stopped regularly using my oldest card in 2016. I did end up using it this month for the rewards category, and they've recently sent me mailers requesting I add authorized users. I'm about to switch again because I've found a better cashback deal.
2. I trust this person, and it is reasonable to do so. We are on good terms, and I am already funding their recent move to be closer to family. They don't anticipate using the card, in fact the main risk I see regarding unexpected charges is if their card is stolen.
3. The credit score is a concern less about access to credit, and more about renting, car insurance, employment and other ancillary ways people are punished for not being in the system.
4. They have an old unsettled student loan they've allowed to balloon in fees and penalties, but there doesn't seem to be any negative information about it from the ratings agencies / creditKarma. They report they're working on a repayment plan now that they have a job (starting Monday). No other loans outstanding.
So my questions:
a) Would adding them to my oldest card help the person?
b) Should I add them to more than one card?
b) Could it harm my credit score to do this?
A few datapoints for followup questions anticipated:
0. I actually have a good credit score, no missed or late payments, etc.
1. I stopped regularly using my oldest card in 2016. I did end up using it this month for the rewards category, and they've recently sent me mailers requesting I add authorized users. I'm about to switch again because I've found a better cashback deal.
2. I trust this person, and it is reasonable to do so. We are on good terms, and I am already funding their recent move to be closer to family. They don't anticipate using the card, in fact the main risk I see regarding unexpected charges is if their card is stolen.
3. The credit score is a concern less about access to credit, and more about renting, car insurance, employment and other ancillary ways people are punished for not being in the system.
4. They have an old unsettled student loan they've allowed to balloon in fees and penalties, but there doesn't seem to be any negative information about it from the ratings agencies / creditKarma. They report they're working on a repayment plan now that they have a job (starting Monday). No other loans outstanding.
So my questions:
a) Would adding them to my oldest card help the person?
b) Should I add them to more than one card?
b) Could it harm my credit score to do this?
Adding an authorized user appears to be related to selling a “tradeline” if you want to search for more information. It does boost the credit score of the person added, and there’s a whole industry around people with good credit selling tradelines, so it appears to be safe. For unrelated authorized users, you get the card sent to you and don’t ever activate it, and I’d recommend doing the same with your friend.
posted by dttocs at 7:03 AM on June 17, 2019
posted by dttocs at 7:03 AM on June 17, 2019
This is risky, not something I would do except for family, and that's because I know I wouldn't cut off my family over them breaking down and using the card and "unintentionally" trashing my credit by not paying, which I unquestionably would a friend. Have them get a Capital One secured card. A year of responsible use (as little as possible) should get them onto their regular low-credit-score card (Quicksilver). They definitely don't offer the best terms but they're tolerable on an interim basis, especially if a balance is not carried.
posted by praemunire at 8:02 AM on June 17, 2019
posted by praemunire at 8:02 AM on June 17, 2019
I have done this for someone with a Chase card (I believe some of the banks don't report authorized users, so definitely do a bit of research). I think I may have added them to an Amex card as well. It was very helpful to their score, boosting them to a decent score over a period of 2-3 years-- they started from a place where they were actually denied a secured card and hadn't had a card in years.
Based on my research, as long as you don't let them run up a balance on it, it can't hurt your credit score or link your credit to theirs. That said, I'm sure you know this but you will be on the hook for any charges they make. Also (again, this may be obvious), if you stop paying or something, you could actually hurt their score.
IME the card gets sent to you, so you don't need to actually give it to them. Obviously, this doesn't mean they can't get their hands on it somehow so it doesn't protect against someone straight up scamming you, but if you just have doubts about their self control this is helpful.e
posted by geegollygosh at 3:00 PM on June 17, 2019
Based on my research, as long as you don't let them run up a balance on it, it can't hurt your credit score or link your credit to theirs. That said, I'm sure you know this but you will be on the hook for any charges they make. Also (again, this may be obvious), if you stop paying or something, you could actually hurt their score.
IME the card gets sent to you, so you don't need to actually give it to them. Obviously, this doesn't mean they can't get their hands on it somehow so it doesn't protect against someone straight up scamming you, but if you just have doubts about their self control this is helpful.e
posted by geegollygosh at 3:00 PM on June 17, 2019
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It’s not supposed to hurt your own credit score, but there’s always some degree of risk when tying yourself to someone financially. I think, before you do this, you should find out with certainty if they plan to use the card, when they will set up the student loan payment plan, and in general what their spending habits are.
posted by girlmightlive at 4:44 AM on June 17, 2019 [1 favorite]