I want to get an authorized user account to jumpstart my credit repair. Are there any potential issues I should be careful about?
It is very easy to set up an authorized user account, as long as you have a willing donor. And the new account should provide a noticeable increase in your credit score as soon as the account makes its appearance on your credit report – assuming that the donor’s account has all of the proper characteristics to help rather than hinder your credit repair effort. Setting up the account is as easy as having the donor call the creditor and asking them to add you to the account as an authorized user. This is a common practice and will not raise any eyebrows, unless your donor decides to chat about the credit repair benefit that you hope to achieve.
If you want an authorized user account to help your credit repair effort it must have certain characteristics. This is very important as the wrong account can do more harm than good. The donor account must be a mainstream credit card; MasterCard, Visa, American Express, or Discover. Store cards are of no value. The account should have been open for at least two years, but the older the better. And, of great importance, the account must have a low balance relative to its limit. Do not be shy about questioning your donor about the characteristics of the account, as it will have a direct impact on your credit scores.
Loss of Control
You must also have implicit faith in your donor. Once their account shows up on your credit report your credit scores will move up and down based on your donor’s account use. If your donor runs his balance up to the limit during the holidays your credit scores will tumble, maybe at the exact moment you need them to be good. And the potential credit repair problems can be even worse if your donor were to default on the debt. If this happens you will have a charged off account to go with your seriously depressed scores. And, as a final blow to your credit repair, you will discover that the creditor is completely unwilling to remove you from the account once it is in a derogatory status.
Prospective Lender Problems
Here is a last bit of credit repair advice. Although authorized user accounts can boost your scores, it is made clear on your credit report that the account is not yours and coded with an “A”, for authorized user. Many lenders simply look at your scores when making a lending decision, but others will review your credit to see if you have a certain minimum number of accounts in your own name. While adding an authorized user account can provide a nice boost to your credit repair, it is critical that you also open a couple of account of your own.