If you’re an authorized user, you’re not the owner of the account but you’re allowed to use the card. Legally, any unpaid balances are the responsibility of the owner of the account. In Diane’s case, she was allowed to use the card but her husband was legally responsible for paying the debt. And when the card was initially approved, it was based on her husband’s credit history and score. Alas, her husband also benefited the most from a credit history standpoint.
I asked Tom Quinn if being an authorized user was at all beneficial to Diane’s credit score. His response: “It depends on the model version and development approach of the model developer. With FICO, the newest score version (referenced as FICO 08) contains logic that still considers the authorized user tradeline if present on the credit bureau report, but with less weighting (or contribution) compared to previous score versions.” So it might help her a little, but it’s not the way to develop a solid credit score.
Joint Account Holders
If you’re a joint account holder with your significant other, approval for the account was based on both of your credit histories and the information you both gave on the credit card application. As a result, you’re both legally responsible for paying debts on the account. This type of situation can get sticky if the two of you split up. You’ll both have to come to an agreement over who pays what since you’re both liable.
With a joint account, your credit activity gets reported to the bureaus and if the account is handled responsibly, you can develop a good credit history. However, if your significant other is sloppy about paying the bills, it can also damage your credit history. So before you enter into a joint account situation, be sure your partner is trustworthy with a credit card.
Your Own Credit Card
Being an authorized user or a joint account holder has its place in a consumer’s overall credit card strategy. But do make sure that you also have a credit card where you’re the sole account holder. It’s essential to have a credit card that you’re responsible for and that shows up—in a positive way, of course—on your credit report.
Like Diane, you never know what life has in store. Having a credit card in your own name is a step toward helping you survive financially if you suddenly find yourself alone.