Scoring benefits of piggybacking vanish as soon as you’re removed from the account
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Dear Speaking of Credit,
Someone without any credit history gained a high credit score after being added on my major credit card as an authorized user.
It has been only five months and this person had zero credit history prior to being placed on my card as an authorized user.
How would it affect this authorized user if I terminate them from my credit card account? And if so, how soon will it affect the authorized user’s account? – Najwa
As your authorized user friend has no doubt found out by now, a consumer can indeed go from having no credit history or credit score to a high credit score – mid-to-upper 700s – literally overnight.
All she has to do is piggyback as an authorized user on someone else’s credit card account. An account, by the way, that she will bear no legal responsibility for – even when actively using it.
Here’s the reason why this way of establishing a credit score can work so easily: Most credit card issuers not only report account information monthly to the credit bureaus in the names of their primary account holders, but also in the names of the authorized users of those cards.
How authorized-user credit score benefits work
These authorized user accounts then become part of the authorized users’ credit reports and credit scores for as long as they remain guests on the account.
Once removed from a card, the account is then removed from the authorized user’s credit reports and scores, leaving no remaining trace that it was ever there.
For most consumers, just one authorized user account with a history of on-time payments and a low balance can generate a FICO credit score of 700 or higher – a score good enough to qualify for new credit in the authorized user’s name. That is, as long as the account meets these two criteria:
- Has been open for at least six months.
- Has been reported by the card company to the credit bureau within the past six months.
Single authorized user account removed from credit report? No credit score
So, here’s my answer to your question of what scoring impact to expect for the authorized user when taken off of the card – and how soon.
Without any other credit of her own, her score will simply disappear until she either opens a new account of her own or becomes an authorized user on another card.
We know what to expect if she were to become an authorized user on another card. But what if she had already opened a new card or loan prior to the removal of the authorized user card?
Or what if she didn’t, but later on decides to open an account in her name after the authorized user account has been deleted from her credit report? What will that mean for her score?
Six months: A magic number in credit scoring
There needs to be at least one account on her credit report at least six months old for a credit score to be calculated. This presents two possible scenarios:
- If the authorized user card falls off of her credit report before any newly added account reaches six months old, no score will be calculated.
- If she opens a new account on her own after the authorized user account has been removed from her report, no score will be be calculated until that new account turns six months.
In either situation, the resulting score is not likely to be as high as the first one that relied on the authorized user account. This is because any new account is going to be much younger than the one it’s replacing – length of credit history is an important scoring factor, accounting for 15 percent of a FICO score.
Video: FICO’s 5 credit score factors
Yet, a score ranging from the high 600s to low 700s is readily achievable from a new account with a history, brief as it may be, of current payments and low credit utilization – the amount you have borrowed compared to your credit limits.
The key to a higher credit score? Pay on time, charge low
Then, looking to the future, fortunately, any score, high or low, will continue to rise over time with consistently on-time payments and low utilization. That and limiting additional new account openings will be the key to sending a score well into the 700s and higher.
The basic lesson here is that while a good score can be obtained without any of your own credit history – just an authorized user account – no long-term score stability will be achieved without first establishing some credit in your own name and responsibly maintaining that credit for as long as possible.
See related: 6 questions to ask when adding an authorized user to your card, How to remove an authorized user from a credit card account
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