Adding Authorized User To Credit Card

[Wish Upon A Star]

DD is turning 18 in a few weeks. If I added her as an authorized user to my credit card, would that provide HER with obtaining credit in her name?

When I was 18, I was engaged and trying to buy a condo with my fiance. My father ended up having to co-sign the loan because we both didn't have credit. I do not want that happening to my DD and I figure instead of getting her an individual credit card, she can become an authorized user on mine and receive great credit for when she needs to buy something on her own.

Is that how it works?

 

[disneynutt1225]

It would be a start. She would begin to have a credit history as an authorized user, but the credit report would say "not responsible for paying" the account. It should allow her to get a credit card on her own at some point in the future, though. It doesn't mean she won't need a cosigner for the first few years she has the card.

ETA: I just found an article that basically says being an authorized user will not be taken into consideration by FICO when computing your score. This is set to begin in 08. http://www.fairisaac.com/NR/exeres/FAC104CE-DF7F-4610-8A36-85F39C4ED9AB,frameless.htm

 

[wvjules]

Yes, it will give her as much history as you have on that card. Your history becomes hers.

 

[barkley]

yup-in fact she may find herself flooded with credit card offers.

my mother put my brother on hers just so he could pick up her perscriptions-and when i say noone should extend credit to him i mean it emphaticly. despite a horrendous credit history of his own, no income or assetts-based on him being an authorized user on hers he took advantage of tens of thousands in credit cards lenders were tripping over each other to give him within a year of getting user status on hers

 

[Wish Upon A Star]

I figured it would be a great start since our credit is good and I would be able to watch her spending to see if she was truly mature enough to handle the responsibility of paying off debt monthly if you use a credit card. I would also like to have her get a Shell Gas Card so that she can get some credit that way too.

 

[Cool-Beans]

I might be wrong, since everyone is saying Yes, I probably am.

But I was told that unless the bill is in YOUR name, it holds no history for you. Having your name printed on a card is just a service for the actual cardholder. That's why I had to get cards in MY name and not just be a user (with my name on a card) on DH's.

 

[mickeyboat]

I might be wrong, since everyone is saying Yes, I probably am.

But I was told that unless the bill is in YOUR name, it holds no history for you. Having your name printed on a card is just a service for the actual cardholder. That's why I had to get cards in MY name and not just be a user (with my name on a card) on DH's.

This is my understanding as well.

Denae

 

[Jestocost]

Yes, it will give her as much history as you have on that card. Your history becomes hers.

Actually, in June Fair Isaac (the company responsible for producing the FICO score) removed authorized user accounts from consideration by the scoring model in FICO. This is due to the fact that individuals with good credit were "renting" their credit score to people with poor credit by adding them as authorized users on credit card accounts. The people who "rented" the credit score could then get a mortgage or other credit at more favorable terms.

Here's the press release announcing the change.

 

[Breezy_Carol]

I might be wrong, since everyone is saying Yes, I probably am.

But I was told that unless the bill is in YOUR name, it holds no history for you. Having your name printed on a card is just a service for the actual cardholder. That's why I had to get cards in MY name and not just be a user (with my name on a card) on DH's.

This is what I thought too. I put both kids on my account once they were in high school so they had access to money on school trips (overnight band trips) if they needed it. DD 21 just recently got a student credit card in her own name to start to build her own credit. I may have get DS one in his name and use it for school related bills we pay anyway to help build his credit.

 

[Disney Doll]

When I was 18 my father reecommended getting a CC in my name with a low limit. I think I had $500 or $750. That way, even if I charged it to the max, it wasn't so much $$ that it would have been a hardship to pay it off.

I had a part-time job, so he recommended that I charge a couple of things per month and then pay the bill to start to develop a credit history.

Worked for me.

 

[bellacam]

I worked as a credit card lender for many years. By simply adding your dd as an authorized user, you are not helping her establish credit. We would not consider accounts a person was an authourized user on in lending to them becuase they are not legally responsible for the account. You are better of being a co signer or guarantor on an account established in her name once she turns 18. That is they only way for her to trully establish her own credit.

 

[ducklite]

Some creditors don't even report authorized users to the credit agencies.

She should apply in person with a loan officer at the bank she has her accounts with for one of their cards. As long as she's got some savings and a history of no bad checks she should be approved for a small line credit card.

Anne

 

[Wish Upon A Star]

Thanks everyone!

 

[webstah]

Why don't you check out your bank and see about a secured credit card in her name?
I don't have all the details, but it would require depositing a certain amount in an account which the card would be secured against.
She would still get a monthly bill, but can only charge to that limit.
Getting a low interest card to start isn't a bad idea, but the credit card companies are always bumping up the limit and encouraging people to use it.