Dear Credit Card Adviser,
I have excellent credit; my boyfriend does not. Will adding him to some of my existing cards as either an authorized user and/or joint cardholder improve his credit? Would it hurt mine?
It could improve his credit score, but do you really want to add him to your accounts? While it may seem romantic to blend your finances, the gesture could backfire big time if he increases your debt load, and higher balances could tank both of your scores. Read the story “Price of love gone bad? $16,000” for a cautionary tale.
The main difference between an authorized user and a joint accountholder is that the latter is also liable for the debt. In this case, he would share the account with you and get credit for the payment history on his credit report. Authorized users typically also see the payment history reported, but are not on the hook for the payments. Misuse of the account in both cases hurts the credit of anyone whose name is on it.
That said, adding him to your account won’t, by itself, drag down your score, since his credit history won’t merge with your credit report.
Responsible usage of the card should help his credit. You would need to keep statement balances low — under 30 percent of the credit limit, if possible — and make sure that the bill gets paid on time.
If you decide to add him as an authorized user, ask the issuer if it will report the payment history data on your boyfriend’s credit report. Otherwise, he won’t benefit. The Equal Credit Opportunity Act of 1974 compels creditors to report payment history information for an authorized user married to the primary accountholder. For all other authorized users, the issuer decides whether to report.
Newer scoring models, once widely adopted, will diminish the score boosts authorized users enjoy. For instance, VantageScore, a scoring model launched by all three major credit-reporting agencies in 2006, ignores authorized user trade lines in score calculations.
In January, Fair Isaac announced it is rolling out a new scoring model to lenders, nicknamed FICO 08, which reduces the extent to which authorized users listed on the accounts of strangers can inflate their scores. The credit score developer will not describe the methodology for distinguishing between legitimate authorized-user accounts and so-called “piggybacked” trade lines.
Asked how FICO 08 would treat her boyfriend’s authorized-user trade line, Ethan Dornhelm, a senior scoring scientist at Fair Isaac, says: “The amount of change to a consumer’s FICO score from the addition of one authorized-user account will vary based on his other credit history. However, trying to deceive lenders about a boyfriend’s credit history isn’t recommended. The boyfriend will benefit a lot more by improving his own score over time through his practice of good credit habits.”
It takes years for the majority of lenders to adopt a new scoring model. Many still use older versions from 2004.
The bottom line is, do you want to risk your credit to help his?
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