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How Does Being an Authorized User Affect My Credit Score?

Dear Experian,

How does being an authorized user affect my credit? The account is in good standing and has a long history, but a high -- 85 percent -- utilization rate.

— KSM

Dear KSM,

As a general rule, any account appearing on your credit report will likely have some impact on your credit scores. Authorized user accounts can help you build credit if they are being managed well. However, not all creditors report authorized user accounts to the credit reporting agencies.

Whether or not being an authorized user on someone else's account will affect your credit will first depend on whether or not the creditor is reporting the account.

How an Authorized User Account May Affect You

If the account does appear on your credit report, how much it will affect your credit scores depends on the credit scoring formula, also called a "model," being used. There are many different credit scores available to lenders, and some credit scores may not weigh an authorized user account as heavily as it would an account where you have joint or individual responsibility.

Your payment history will always be the most important factor in your credit scores. If the account has never been late, having the account on your report may be beneficial for you, especially if the account has been open and active for quite some time and the rest of your credit history is limited.

The second most important factor is your credit utilization rate. In general, the lower your utilization rate, the better for your credit scores.

Your overall utilization rate is determined by taking the total of all your balances on revolving accounts and dividing them by the total of the credit limits on those accounts. Having even one account on your credit report with a high utilization rate can affect your credit scores, so you are wise to be concerned.

Because the account you mention has such a high utilization rate, it may not be as positive for your credit history as it otherwise might be. Reducing the balance will likely help. Ideally, you should pay your balances in full each month. At a maximum, you should not carry balances of more than 30% of your credit limit on any one card or as a total of all your credit cards.

How to Determine Whether a High Balance is Impacting Your Credit Scores

The best way to determine whether this particular account is affecting your credit is to order a copy of your credit score from Experian.

A list of the factors that are currently affecting your score will be provided. If you are trying to improve your credit scores and one of the factors listed indicates high balances on revolving accounts, it may be time to evaluate the balance on both your authorized user account and any other revolving accounts in your credit report. "Revolving" is the technical term used to describe a credit card account. You can carry a balance, or revolve the balance, from one month to the next.

Since you are not the primary account holder, you probably have little control over the balance kept on the card, but you do have the option to request that it be removed from your credit report.

Before doing so, consider the benefit it may be bringing. if your credit score is already very good and the account is beneficial in other ways, it may be worth keeping, even with the high balance.

Thanks for asking,
The "Ask Experian" Team

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