11 Feb 2019

Better credit with tradelines is romantic.

Recently, we read an article about adding tradelines to a loved one for valentines day. The point is that increasing someone’s credit score by adding them as an authorized user is romantic, indeed. But, much like an attorney telling newlyweds about prenuptial agreements, we’re going to take a different spin on this. We want to talk about the reality of adding someone as an authorized user and make sure you and the authorized user are set up for success.

All the cool kids are doing it, they say. Bankrate even had an article about adding your valentine as an authorized user (see below).

…so, let’s discuss just that:

Benefits of adding your valentine as an authorized user:

The benefits of becoming (or adding someone as) an authorized user is common sense. Here’s a list to name a few benefits:

  • Their credit scores will increase. It’s been known for decades that adding someone as an authorized user can increase the authorized user’s credit score (provided the account is in good standing).
  • You will build a bond with your significant other.  Sharing in financial responsibility can help you both learn something (either about your own financial behavior or theirs or both).
  • You both can build points on the credit card. If you’re racking up charges and payments through the card, you could build points that you otherwise wouldn’t. Going out to get coffee, lunch, office equipment, etc.? Rather than paying with your debit card or cash, run it through the authorized user card and pay it off at the end of the month. You will potentially rack up points by using that card more often.
  • You could potentially increase both of your scores. If you convert all your spending through the account onto which you’re an authorized user and pay off the balance on time, every month, the creditor could see you as a good credit risk and may increase your limit. When (and if) this happens, the credit scores of both the primary account holder and the authorized user will increase.

Cautions of adding your valentine as an authorized user:

There’s an old saying about a particular road built with good intentions. Before you add your valentine as an authorized user, let’s just consider a few of the drawbacks so you can take the necessary precautions.

  • An authorized user is not responsible for the debt. That’s right, even if your loved one racks up a bill as an authorized user on your credit card, you…and you alone… are responsible for that debt.
  • Credit scores are impacted. Note, I said “impacted” and not “increased.” It is generally accepted as common knowledge that the credit score of the person added as an authorized user will increase. But, this isn’t entirely accurate. The credit score of the person added as an authorized user will be affected by the tradeline added. If the tradeline is in good standing, yes, your score will go up. But, there are many scenarios that could bring down your credit score, such as:
    • The primary account holder (or authorized user) racks up a large balance decreasing debt to credit ratios.
    • The primary account holder misses a payment.

If something goes wrong, the authorized user is in a better situation.

If there was a fallout between the primary account holder and the authorized user, the authorized user has the upper hand. The authorized user can simply dispute the account off of their credit report and it disappears as if nothing ever happened. Not so for the primary account holder.

The primary account holder, on the other hand, is stuck with any damage that occurred.

Final thoughts:

If you’re capable of increasing someone’s credit score with your credit accounts, you should contact us because you stand to benefit financially from our vendor program. On the other hand, if you’re looking to increase your credit score by being added as an authorized user, but do not want to hitch yourself to or burden your significant other, you should click here to get started as we may be able to help on a purely professional basis.

Leave a Reply

Your email address will not be published. Required fields are marked *