Joint Accounts and Authorized Users (Piggy Backing)

[Wanderer]

No that is NOT correct... adding as an "AU" does help your score assuming FICO or another scoring system doesn't flag you off for some reason like not being related (also assuming the other primary account holder has good credit).

That is what the big flap was about twelve plus months ago... people with bad credit buying the "AU" from a willing seller and upping their credit scores using the primary card member's good credit.

FICO and other credit scorers got ticked as this was NOT the original intent of an "AU". The theory was it for family relations (now how you prove all this and was it really that...?!) to let them use an account without actually getting the account. Example, college student gets added to dad's credit card since he has no credit but needs a card at school (this was pretty common years ago).

It was NOT set up to get around the FICO and other scoring systems but, smart people figured there was a buck to be made and they did. FICO was going to block the non-related buy of "AU" status but... did it ever really happen...?

Yes a joint account too may help your FICO or other scoring system score if the other joint account holder has equal to or better credit. If not, it could bring your score down because the joint account is reported to both account holder credit reports and that could be good or bad.

[Wanderer]

"Joint Account Holders" & "Authroized Users" BOTH have access to the same line of credit. With the joint account holder's however (they share the role of primary account holders), any joint account holder is responsible to repay the debt of the account no matter which joint account holder made the charge (incurred the debt). In the case of joint account holders, both incomes and credit history's may be used in consideration for higher lines of credit. Generally, the concept of a Joint Account holder came about through marriage (from the old days). In today's world, I have no idea.

In the case of the Authorized User, the AU shares the existing primary account holder's credit line (AU has no effect on the size of the credit line as the income is not considered) and has NO LEGAL responsibility for the account debt (charges) and is NOT LIABLE to repay the account debt (in most cases).

Definitely read the fine print of the account holder's agreement.

[nflight3]

I HAVE GREAT NEWS!!!!!!!!!! Called Lowe's, I was added as Joint account holder. Pulled myfico score...went up 24 points immediately from 590 to 614. Experian only went up five points from 584 to 589. So yeah...with another 3 months worth of payments, the fico score simulator puts me in the 630-650 range. YAY. We can play this credit game and come out ahead!

Does anyone know if Lowe's reports authorized users on their Corporate Acct?
I recently got a job and was added to the company's long-standing A-rated account and I am praying they will report to my struggling new DNB acct. It felt like an amazing stroke of good luck when they gave me the card. What do you think?

[Wanderer]

nflight3 - Give Lowe's credit department a call and let us know what you find out. I have a corporate account with a major bank and I never thought about this question before?

Had an opportunity to talk with the major bank on your question. They take the view that the "corporate" account would NOT report an authorized employee (user) to the credit bureau. In fact, the bank would NOT report the corporation to the credit bureaus. Now they also stated they have three basic levels of bank credit card accounts: 1) personal, 2) small business; and 3) corporate. The major bank also would NOT report small business owners to the credit bureaus unless there was adverse account activities. The only accounts the major bank would report are personal accounts (for individuals, joint account holders and authorized users). The major bank did state there are exceptions but, nine out of ten times the major banks would follow this path.

An example of an exception is Capital One. For reasons unknown to me, they decided to report all bank credit card accounts to the credit bureaus as of October 2009. As a small business owner I had two small business accounts with Capital One (CL's $10.6K and $6K) and I closed them both due to their credit reporting to the credit bureaus (note I had an eight year successful unblemished relationship - track record). My stand was that business is seperate from personal and most major banks see it that way (it would also reflect two new accounts with high credit limits when the lenders were skidish about such actions).

Also, there may be some corporate reporting to Dun & Bradstreet type firms depending on how they set up their relationship but, again not the authorized users.

Suffice it to say, I doubt that you would be reported. There is also the distant potential liability of the employee for their card usage to the bank (normally the banks don't enforce this). Example, the corporation files bankruptcy and doesn't pay the bank credit card... depending on the wording of the corporate card holder agreement there could be a remote potential liablity (again most banks would NOT go back to the employee - very bad press).

[belle]

You can still add "authorized users". What happened is people were paying people with good credit to add them and bad credit suddenly goes up. FICO wanted to limit this practice to legal family members. Supposedly they had a method to screen out the use of authorized users who were not family members. Not sure they really were able to do that or that the practice of screening ever worked. How would you know what the family relationship was...? Any way that gives the current happenings.

Thanks Wanderer. I agree, I don't think they'd really know what the family relationship is unless they really have a foolproof plan of finding out about it.

[Meya]

lol! what a catchphrase Meya.

[Meya]

belle - nothing changes for the primary cardholder when an "authorized user" is added. The primary cardholder is still responsible for the debt on the account. The only difference is an authorized user can benefit from the credit rating, credit limit, use the account and not have any responsibility for the debt (yes, there is risk to the primary account holder). Generally, this was invented to add a spouse or child. The sale of a primary cardholder's credit score to others to improve their own scores was another one of those innovative "SCHEMES" conjured up by the less than honest. FICO said they would sort out which FICO scores were family related versus not-family related and only consider the family related authorized users. Whether this is the final shake I don't know. The interest rate, monthly payment amounts, credit lines and such still work exactly the same as if the authroized user didn't exist.

Joint accounts are different. There those who signed on as joint account holders (generally started out as spouses - today who knows) are equally liable for all actions on the account. Again the rules related to the account remain the same but the credit line might be higher if the joint incomes could support a higher line of credit. Also, depending on each joint cardholder's credit scores they may even have better rates than individually if one holder has better stats.

Sorry everyone, but this is a true posting and if I were you I would take what Wanderer said and roll with it.

[hanna]

Sorry everyone, but this is a true posting and if I were you I would take what Wanderer said and roll with it.

I'll take Wanderer's words Meya. :)