Being an authorized user on someone else’s credit card has many benefits. From building your credit without having an account to repairing it in case of a poor credit score. As an authorized user, you can avail a number of privileges from another person’s credit card without being legally liable for clearing the debt. These include travel insurance, reimbursement for stolen goods, manager access to your card, payments, report of lost/ stolen credit cards, and access to monthly statements and payment history etc.
Authorized users are usually family members such as a child or a spouse, or it can be someone in dire need of a credit boost for the purpose of a loan or credit. In any case, it’s critical to use the card responsibly by both the actual account owner and the authorized user. So, if the account holder doesn’t use the card sensibly, it can jeopardize the credit score of both the card holder and the authorized user. Similarly, an authorized user can also affect the account holder’s credit score, depending on the way he/she uses the card.
Now just like getting added as an authorized user can impact your credit score, so can being removed as an authorized user from someone’s credit account. And that's what we’ll be talking about in this post. But first, you must know that in order for your authorized user account to affect your credit in any way, the actual account holder has to report your authorized account to all the credit bureaus (Equifax, TransUnion, and Experian).
Once your authorized user account is part of your lender’s credit history, you can expect to have the desired credit boost as early as in 30 days. Speaking of which, being an authorized user on someone’s credit account is a temporary fix for people looking to repair their credit score. So, adding and removing authorized users is something of a common practice in today’s complex financial system. There are many reasons to remove or be removed as an authorized user from someone’s credit card. Let’s take a look.
Reasons for removal of an authorized user
The foremost reason to be removed as an authorized user from someone’s credit card is when you’ve gotten the desired credit boost or credit repair and are ready to focus and maintain your credit account on your own. After all, credit boost or repair is also the primary reason for someone to become an authorized user in the first place.
Other factors may include ending relations such as a separation or a divorce between spouses, closing of the actual credit account, or minors who have reached the legal age of owning an account and building their credit. The account holder can also remove an authorized user in case of a delinquent payment behavior by the user or if the owner needs an approval for a loan or a new card.
How to remove yourself as an authorized user
To have yourself removed as an authorized user, you need to contact the primary account holder as you won’t have the rights to do so on your own. The account owner will then make the necessary changes as well as inform the credit bureaus to remove you from their credit report and vice versa.
If for any reason, you can’t reach the actual account holder, or have removed yourself as an authorized user but the account still appears on your credit report, then you can use the credit report dispute process to have your authorized user account removed from their credit report. Once the removal is successfully done, the entire credit history of the main account will disappear from your credit report and will no longer impact your score in any way whatsoever.
Doesn’t sound that difficult, does it?
Okay, so moving on, let’s find out if being removed as an authorized user from someone’s card can impact your credit score.
Impact of being removed as an authorized user
- As soon as you’re removed as an authorized user, you’ll no longer have the privilege of using the account or its credit score. Your credit report will stop using and reflecting the credit record of the primary account holder.
- If your credit report still shows the authorized user account even after being removed as an authorized user, you must submit a credit report dispute to have it removed.
- Being removed as an authorized user means your line of credit is closed. So, if you had a low credit score before becoming an authorized user and haven’t been able to boost or repair your credit during your tenure as an authorized user, chances are that you may experience a drop in your credit score. Closing a line of credit can impact about 15% of your overall credit ratings.
- Also, if your credit was improving as an authorized user on someone else’s card due to his/her timely payments and ideal utilization, chances are that your credit may take a hit after removal.
- Moreover, if as an authorized user you’re unable to fulfil your end of the bargain, which is paying the account owner for any purchases made using the authorized user card, the account holder may have to suffer with both penalties as well as a negative impact on their credit record. This in turn may also cost you with less trust and opportunities of getting tradelines or lines of credit in the future.
- The age of the authorized user account also plays a crucial role in impacting your credit score. So, the older the primary account, the more the drop in your credit score.
- Plus, if the authorized user account is the only positive account in your credit report, then being removed from that account can also hamper your credit score. So, it’s advisable not to remove yourself until you’ve gained the desired credit boost and are good to go solo.
Being an authorized user on someone’s credit card can impact your credit record both positively or negatively depending upon how both the parties use their credit cards. Being removed from someone’s card as an authorized user won’t have much of an influence on the primary account holder but can certainly impact the credit score of authorized users for better or worse.
So before becoming an authorized user, make sure to double check that the lender is not a defaulter. Find someone with a good payment record, old account, and low utilization ratio so as to build or improve your own credit score. This way, once you have a solid credit score, you can start your own credit account or if you have a bad credit record, you can repair it. But remember, the best way to maintain a good credit score so as to qualify for loans and credit offers is always to pay in a timely manner.
Keep these things in mind before becoming an authorized user and I’m sure you’ll have no problem in getting the desired effect on your credit report in no time.
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