Authorized User Accounts-When do they start reporting?
Your Credit Minute Show Notes:
- 00:00 What’s up, guys? Nikitas Tsoukales here with Credit News Daily. Listen, I want to do a quick follow up video to our last video. You probably already watched this. Um, trade line. Should I buy them? Um, if you’ve seen that video, I just want to add a little bit of something. I’m really just elaborating on authorized user accounts. If you remember from the last video, we were talking about authorized user accounts, and the big question we go, we get. Should I become an authorized user on someone else’s credit card, okay? So if you’re unsure what this is, an authorized user account is fairly simple. Okay, somebody you know, okay, has a credit card, and they make you a card holder on that credit card. For example, if you work for a big company, a lot of times they’ll say, “Hey, here’s a company credit card.” They’ve just made you an authorized user on that card. What you don’t realize is you actually get that positive reporting from that card to hit your credit report each month. So it’s a nice little loophole in building up some positive credit.
- 00:56 Now there are some companies that actually sell trade lines or sell the ability to get on to someone else’s authorized user account. They call it piggy bank, piggy banking, uh, piggy backing. Um, it’s super shady, totally illegal. Obviously stay away from it. But if you have a spouse, okay, that’s had a credit card that you’ve been paying on yourself for many, many years but you’ve never been on it, you can actually get placed as an authorized user on that card and start getting the reporting from it, okay? So authorized user account. What is it? You’re basically piggy backing off of someone else’s credit card, okay? Now, you don’t want to do this with any other credit card other than a spouse’s, okay? And the reason why really has to do with lending criteria. So a lot of banks and lenders have seen people in the past use this loophole to, to build up their credit, okay, and build up positive trade lines and positive activity without actually uh, being credit worthy, okay? So they’re on to you if that’s what you’re doing. It doesn’t work anymore, okay?
- 02:01 Fannie and Freddie, the companies or the government agencies that back the majority of our home loans these days, when they see that you have an authorized user account now on your credit report, they’re gonna ask you a question. Is it your spouse’s? If you answer no, they’re simply gonna tell you, “Get them removed so we can re-run credit,” because most major banks, lenders and the government agencies that are backing these loans just simply don’t consider them accounts. Okay, so even if you’ve got a temporary loophole lifting your credit because you’ve become the authorized user on your cousin’s credit card or your neighbor’s credit card, your boss’ credit card, guess what? It’s not gonna last, guys. It’s coming to and end, okay? But if you, if you’re added to your spouse’s card, you will get that positive credit and most major banks and lenders will allow you, um, to use it for, for your loan, understanding that it is one household. So it does affect your credit worthiness. Most likely you’re paying it with your wife or your, your spouse, right? Um, another thing is, uh, another question we get asked is, you know, do I get that person’s reporting from the beginning? Um, it used to be that when you became an authorized card holder on someone’s American Express, for example, okay? You actually got all of the previous payment history on that account. So let’s say you’re a pretty young guy, 20 years old, and your parents made you a cardholder on their American Express that they’ve had since 1965, technically speaking in the old days, you were getting all of that previous reporting from 1965 from before you were even born. Okay? It was one of the greater grand slams in artificially boosting your credit score. Um, that’s over with now, though. That does not exist, so when you become an authorized user on someone’s credit card, the reporting will start from the day you become an authorized user. You’re not getting someone’s previous history. The date open will be the date it was opened, the date you became a card holder, okay? So it’s something that I tell people to do a lot when it’s a spouse. If it’s not a spouse, stay away from it.
- 04:03 Um, again, like I explained on the last video, if you need to build up positive trade lines, um, you need to get some new credit or you need to build up positive credit history after you’ve already damaged your credit score, the easiest, the smartest, the best way to do it is through a secured credit card. Your local bank and lender is typically gonna offer this, or your local bank or credit union. If you want to do this online, if you go to bankrate.com, they have an entire section on secured credit cards. Um, we’re not in there trying to get the best interest rate, guys. You’re not gonna get zero percent, 12 month APR, any of that jazz. You’re not gonna get the JetBlue points with these cards. These are starter credit cards. So when you get the credit card, use it uh, very minimally, okay? Maybe throw a cup of coffee on the card every month or two, just to show some usage and that alone should help you start building up the uh, the credit reporting and keep in mind our rule of thumb. You want to have a, a minimum of three active trade lines when you do this. So when you’re building up your credit, uh, whether you’re piggy backing off of a spouse or building up your own secured credit card, you want to have a minimum of three happening.
- 05:06 So guys, any additional questions you have regarding authorized user accounts, feel free to e-mail me at NTsoukales@keycreditrepair.com. You can check us out here at Credit News Daily on YouTube and Facebook. We’re dropping a credit minute every single day of the week. Thanks guys. Have a great day.