Your credit score determines whether you get credit and what interest rate you pay on it, so increasing this score is always in your best interest. One way that you might be able to increase your score is by having someone add you to their credit card account. Being added to a credit card can help your score, hurt it or have no effect at all, depending on a few factors.
Account on Credit Report
Credit card companies offer two major ways for individuals to share accounts. If you are a joint account holder, you have legal responsibility to repay the debt and the credit card will definitely appear on your credit report and affect your credit score. If you are an authorized user, you can use the card but have no legal requirement to repay the debt. Some credit card companies will report the credit history to the bureaus, while others will not. If you are unsure, call the credit card company and ask whether or not it reports credit history for authorized users.
Inclusion in Score Calculations
Even if the history appears on your credit report, only some credit score formulas consider it. The FICO 08 credit score, along with all previous FICO credit score formulas, considers most authorized user accounts when calculating a score. The only time the FICO formula will ignore an authorized user account is if it suspects you are paying unrelated people to add you in an effort to fraudulently boost your credit score. FICO does not specify the exact conditions that would cause an authorized user account to be included or excluded. The VantageScore, which is a different credit score that was developed by the credit bureaus, never includes an authorized user account in your credit score, even if it appears on your credit report.
Effect on Score
Having the authorized user account factor into score calculations can either help or hurt your credit score, depending on how you and this person use the card. If the person has had the account for a long time, has consistently made payments on time and keeps a low balance on the credit card in relation to the credit limit, it will probably help your credit score. However, if the account has missed payments or a high balance, having it appear on your report is likely to lower your score.
Time Frame
As soon as you are removed as an authorized user, you will lose all of the credit history associated with that account. To get a more long-term effect, as soon as your credit score reflects the positive history from being an authorized user, apply for a credit card on your own. You can rest assured that you will have this card and its credit history, regardless of how long the authorized user account remains on your credit report. For the best effects on your score, use your individual card regularly for small purchases you would have made anyway and pay them off in full when the bill arrives.
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