 Dear
Dr. Don,
My wife is listed as an authorized user on several of my credit card accounts, and I am listed as an authorized user on a few of hers. Now that credit reporting agencies will no longer "count" being an authorized user toward one's credit rating, should we add each other as actual users to our cards? We both have excellent credit and have never had a late payment, so our only concern is that this would show up on our credit reports as applying for too much credit at once. Do you have any advice?
-- Authorization Anxiety
 Dear
Anxiety,
You raise some good points. The credit reporting agencies are moving away from including any payment history of authorized users in calculating a credit score. Fair Isaac Corp., the company responsible for FICO credit scores, modified its credit scoring system in September and no longer includes the payment history of authorized users. Other credit score providers will follow suit over the next year. The payment history of authorized users won't be dropped from credit reports, but the information won't be used in calculating credit scores.
If you switch from being an authorized user on the account to becoming a full-fledged member on a joint account, any future payment history on the card will go into the credit scoring model used to calculate your credit score.
Such a change is logical for many spouses who are now authorized users on their significant other's account. However, it's important to note that unlike authorized users, joint users are legally responsible for repaying any outstanding card balance.
It's smart to manage the conversion process carefully. When you apply to change your status to joint cardholder, the card provider will review your credit history. This generates what's known as an account inquiry, which appears on your credit report for two years and influences your credit score for the first year. So, converting more than a couple of cards a year may create a short-term dip in your credit score.
I believe the change in the credit scoring model goes against the intent of the Equal Credit Opportunity Act of 1974. This law required credit providers to include the payment history of cards on the credit report of spouses who were authorized to use those cards. The idea was to help build a credit history for spouses who were authorized users so they would have better access to credit in the future.
Now, even though the payment history is still reported, it will no longer be used to calculate a credit score.
The credit scoring firms were faced with a difficult situation when piggyback providers started arranging for people to temporarily become authorized users on strangers' accounts with the idea of improving their credit score. If a credit score loses its predictive powers then it becomes ineffective in the credit approval process.
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