The Impact of Being an Authorized User

November 17, 2012 - Rick

I had the opportunity to work with Sam on her first credit card application recently. Sam is a 23 year old college grad and never had any credit in her own name. BUT her parents put her on their American Express card as an authorized user and has been on that card for numerous years.

Here is the good: It gave Sam a credit score of 740 just being the authorized user.

And the bad: At the moment she applied for her first card, a Chase Sapphire Preferred card, there was a $12,000 balance, she knew nothing about on that American Express that belonged to her parents.

When I met with Sam it had been several days since her application and she was waiting on a response. I suggested we make a call to the reconsideration line to check the status of her first application. After she provided the normal security info was provided, and I was listening on the call via speakerphone, Sam was told she was denied because of the high balance on the Amex card she was an authorized user on. The look on her face showed extreme disappointment but I reassured her we would be OK.

We reiterated to the credit analyst that Sam was only an authorized user in regards to the $12K balance and not legally responsible for the debt, that she was a college educated individual working in her field, lived at home with no expense and the analyst had her income on the application. After a short hold the analyst came back to inform Sam she was recommending her for a $5,000 credit approval and to expect a document in the mail which we assume was to verify income and address.

We worked our way past the balance on the parent’s card but I want you to be aware that being an authorized user is not always the best way to go. I think in this instance for Sam, it got her a score which let her start in the game and presented a hurdle we had to overcome. Now that Sam is in the game, we’ll try to keep her away from authorized users in the future.

UPDATE: Yep, Sam got her approval

Possible exception: Howie made a great suggestion last week for those of you struggling to find Vanilla Reload cards. Do you have a very, very,very good friend, you trust to become an authorized user in a location where Vanilla Reloads are available?

Congratulations to Rene at Delta Points on his One Year Blog Anniversary

“Rene has been a FTG supporter for years and I’m glad to have him as a blogger brethren member this last year. In addition to great content on a unique topic, his attitude is always positive and his uplifting enthusiasm for the travel space has been welcomed by all.

Way to go Rene and keep those posts coming.”

http://www.deltapoints.com/ DeltaPoints.com

Thank you Rick! I am proud to know you and to be some small part of team FTG and to bring some help to my fellow Delta flyers!
Scott

Disagree completely with the strategy of nixing authorized users fully. She still got the card AND the 740 credit score! Would the parents have been wise to remove her as an authorized user prior to an application of her own? I would be curious how that turned out. Also, the parents should know better than to have $12k in debt on credit cards that could show on their authorized user’s credit report. It’s hassle because of the parents being dumb, not because of her being an authorized user.

disqust101

Agree. Parents are dumb as posts – who in their right mind carries a balance on a CC?? Now daughter “learns” obscene financial management from the very start.

Lively

Very interesting post. We gave our daughter one of our Chase cards (authorized user) when she turned 16 and was driving. I think when she gets her first credit card, we will remove her as an authorized user on the account.
milechurner

Congrats Rene!

It seems like Sam’s parents move to add her as AU really helped her with the credit score (though it was dumb to keep balance on credit card). I have a few questions about adding your kids as AU:

1. At what age can you add your kids as AU?

2. Should you make sure to provide their SSN since you can add AU w/o providing this information. I think you won’t be able to benefit if you don’t provide SSN.

Thanks,
Matt

An open letter to the travel blog community

I just have to get these things off my chest, I can’t take
it any more. I have been reading FTG for
approximately 2 years. It was
recommended to me by a friend and I started with 4 (2 each for my wife and I) Citi
American cards for a total of 300,000 miles.
I was amazed and hooked instantly.
About a year ago I started reading “the rest”, if you will, and of those
(like many) I have enjoyed Frequent Miler the most.

I am very frustrated by the general tone/sentiment in the
blog world during the last few weeks.
First of all, why do all the haters think that becoming a blogger means
you are supposed to be freaking Robin Hood.
Travel blogging has no priestly oath of chastity and poverty (that I
know of). These guys are using their
time to write about a hobby that they enjoy and WHY ON EARTH SHOULD THEY NOT
MAKE MONEY DOING IT?? This is the United
States of America, where if you provide a product or service that somebody else
wants and sees value in you can turn it in to a business. And quite frankly, you’d be a fool not
to. I literally could not care less that
the bloggers put links in their posts for cc affiliate links. They could put six in each post and it
wouldn’t matter to me. I read their
posts and either find them useful or not to my particular situation. When I do sign up for a new card I use the
link of the blogger that I’ve enjoyed most in the recent past. I’m glad to do it BECAUSE I feel like I’m
helping the people that teach me about this great hobby every day. I wouldn’t have found out about it on my own,
so don’t I owe my gratitude and business to those that have helped me the
most. I would even click on a donate
button if I didn’t already know that the links pay directly to the
bloggers.

I understand people saying that the posts are all filler and
the same old thing every day. Here’s my
take on that, if I was going to a blog that posted a new cc link every day with
the text…this card is good, you should get it, click on my link…I would stop
reading too. There are blogs that I skip
every day because their posts just don’t do it for me and I will never click on
their links. YOU CAN ALL DO THAT TOO! I know this has been said before, but if you
don’t like it…just don’t read it and quit complaining.

I don’t understand why all the haters seem to have this
sense of entitlement that the bloggers should bend over backwards to provide
new content to them daily, not receive any compensation for it, and then smile
and tell everybody to go enjoy the information that they took the time to
gather and post for nothing in return.

Anyway, this was kind of a rant (I have enjoyed and laughed
at TravelBlogBuzz over the last week too btw) but I just had to get it off my
chest. Thank you to all the bloggers for
all that you do and for making it so easy for us to support your efforts with
affiliate links…I (for one I guess) really sincerely appreciate it.

~Matt

Adrienne Barber

100% agree. Thank you Rick for everything you do.

Poptarts

I completely agree with Matt’s open letter to the travel blog community comments. I get very angry when I see nasty reader comments on the blogs. The bloggers work very hard researching, testing out concepts, and condensing the information into concise easy to understand articles. I’m glad they are making money from all their hard work.
milechurner

Early participation in your deal of the day since this will get filled soon!

I am sure a lot of us are sitting with bunch of Amex cards (thanks to this hobby). Register your Amex cards ASAP (as its limited enrollment) at http://www.shopsmall.com or directly at https://enroll.amexnetwork.com/US/en/SBS2012/ to get $25 statement credit when you spend $25 or more on Nov 24th (Saturday after thanksgiving) at any small business. You need to use your card that day though you can even opt in to buy gift cards of local restaurants etc. There is a tool on the website to find small businesses as well. last year I had bought 4 gift cards of my favorite local restaurants.
Manu V, SEA
AKMooselover

We put both of our kids on one of our credit cards when they got ready to go to college, then added them to AMEX when we got points for adding AUs. So when do we take them off? Or should we just make sure those cards have zero balances before we have them start applying for credit in their own name?

http://www.frugaltravelguy.com/ Frugal Travel Guy

As long as you’re following the same advice of paying things off in full month after month you’ll continue to have a positive impact on them and their score.

AKMooselover

Thanks! Both work summers and one works p/t during college – any idea how much they have to earn per year before they can apply for their own cards?

http://www.frugaltravelguy.com/ Frugal Travel Guy

it depends on the card. Premium travel rewards cards such as the Chase Sapphire Preferred or SPG Amex will require significant income / full time job for a chance to be approved. Other student cards are focused more towards those with part-time / student employment and would make sense to focus on for now.

chemist661

I had my wife add me as an authorized user on 2 of her “ancient” accounts opened in 1984 & 1985. (2 retail accounts).

She has a perfect pay record, low utilization relative to credit limit and never been late ever on those accounts.

I refinanced 3 mortgages (rental properties) and signed up for 3 new CC’s this past summer. My FICO’s dropped from 804 (mid bureau) to 760 but now my Experian (decent estimate from Credit sesame & US Bank Experian) is now 790. The authorized user updates tempered my more score drop quite a bit.

Note: We both have deep, thick credit files going back to the 1980′s and we are in our mid/upper 50′s in age.
Also, I have terminal cancer (in Stage 5 as it at presently spread throughout most of the body) but I am as of this day working full time at my job and still doing CC’s churns for my wife & I. We are somewhat conservative in what we do as my days on this earth may not be alot.
When people criticize bloggers, etc, they don’t seem to have anything better to do than that. (my opinion). There are more important things in life than doing that. We have got alot of great information from the blogs and have been for a very long time!!
Rick, continue to blog as you always have and it gets better day by day!! A big thank you to you & others that support you behind the scenes.
Amanda S

Ah, thank you! I am in a very similar situation, and I don’t trust my parents to pay off their balance every month. It drives me nuts to have something on my credit report that I don’t have control over, but getting my dad to call the credit card company and take me off is like pulling teeth.

http://twitter.com/TheMrPickles The Mr Pickles

I would think that you could call the credit card company and tell them that you do not wish to be an authorized user on that account and to remove you immediately. Credit card companies do not want users that do not want the card.

Alexandra Mareschal

I am in a similar situation with being an authorized user on my parents’ AMEX that always has a high balance but is paid in full monthly (and always has been). The problem now is I am applying for a mortgage in the States with my husband (who is Canadian) so most of the mortgage application is riding on my credit alone. My score is good (mid-700s) but the broker says we have to make sure that the AMEX is not reporting a balance when they pull the report for the loan underwriters. I am pretty sure the age of my parents’ card, which goes back to ’99, is helping my score but as it stands, lender is seeing us as responsible for that balance every month, making it harder to get approved to the purchase price we want. Any advice? Thanks in advance!

http://www.frugaltravelguy.com/ Frugal Travel Guy

You need to do what your lender requires; but I would think a notarized letter might keep the underwriters happy from your parents if indeed you’re not legally responsible even if you’re on as an auth user.

The Impact of Being an Authorized User

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