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Removing yourself as an authorized user on a credit card could help your credit, depending on how the account is being managed. If the primary account holder pays credit card bills late or keeps a lot of debt on the card, your credit may suffer—or not improve at the rate you'd like it to. Here's how to know if it's time to cut yourself loose as an authorized user.
How Removing Yourself as an Authorized User Could Affect Your Credit
If you have no credit history, becoming an authorized user on another person's credit card account lets you build credit without having to apply for an account in your own name. You won't be responsible for making payments, but you'll benefit from the account holder's good financial habits.
In the best-case scenario, the account holder will make all payments on time. Because payment history accounts for 35% of your FICO® Score* —the largest single factor—this is important to boosting your credit. They'll also ideally have a low credit utilization rate, or the amount of debt on the card compared with its credit limit. That makes up another 30% of your FICO® Score. If the account meets these requirements, your affiliation with it is likely to help your credit, and you can safely remain as an authorized user.
But if the person whose account you've chosen to join isn't keeping their end of the bargain, their missed payments could negatively affect your credit—at least temporarily. For this to happen, the credit card company must first report authorized-user activity to the credit bureaus. Next, the credit bureaus must include the negative information, like late payments, on your credit report.
The good news? Not all credit reporting agencies do so. Experian, for instance, will automatically remove delinquent accounts an authorized user isn't responsible for paying from his or her credit report. But since other agencies may still incorporate the account's late payments into your credit history, consider removing yourself as an authorized user and looking into other ways to build credit.
How to Remove Yourself From an Account
You're generally able to remove yourself as an authorized user by calling the credit card issuer and requesting the change. You may also be able to ask to remove yourself from the account online, depending on the company.
The account will no longer appear on your credit report, and its activity will not be factored into your credit scores. That also means that your length of credit history, which constitutes 15% of your FICO® Score, will be affected. In other words, if the credit card you were attached to was the oldest account on your report, your credit history will be shorter without it. But that's a worthwhile change if the account was poorly managed otherwise; late payments have a larger effect on your creditworthiness than length of history.
Making Sure You've Been Removed as an Authorized User
To double-check that you've successfully removed yourself as an authorized user, check your credit report. All accounts in your name, or that you're connected to—including car loans, student loans, credit cards and mortgages—will appear there.
If you've asked to disconnect from a credit card account yet it's still showing up on your credit report, contact each credit bureau individually and dispute the inaccuracy. Explain that you are no longer an authorized user and request that all activity going back to the day you were removed from the account be struck from your credit report.
Weigh the Pros and Cons
The potential perks of being an authorized user are big, but so are the pitfalls. To avoid disappointment, and jeopardized credit, pick your primary account holder carefully. Then pay close attention to their account usage and payment history. If it's time to cut ties, know that there are other options for getting started with or improving credit. Removing yourself as an authorized user when necessary is a step toward thoughtful, vigilant financial proficiency.
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