Wouldn’t it be nice if you could just add an account to a consumer’s credit report, and it automatically has a 2 year PERFECT pay history? Well you can, AND it is 100% legal.
Authorized user accounts are the only legal way to back-date credit reports and add past positive credit history. An authorize user is when a family member calls their existing credit card company, and asks to have another family member added as a user. This allows the consumer to use the card, but they are not required to have their credit pulled to qualify for the account.
What happens is that once the consumer becomes an authorized user, the account is then added to their credit profile. The newly added authorized user, receives the full benefits of the long-standing positive pay history account.
This means their credit scores go up, just as if they had a 2 year perfectly paid account on their credit for years. And the impact to their scores is immediate and substantial.
The key is that your customer must be added to a FAMILY MEMBER’S account only. The FICO 08 credit score will NOT give the consumer credit unless the account is linked to an immediate family member.
And make sure your customer gets added to a long-standing account, with positive credit history, and that the creditor reports authorized user accounts on the credit report.
15% of the overall credit score is based on the length of credit history. So the longer standing account that is added, the higher the score increase will be. 35% of the score is based on payment history. So an account with a lot of on time payments can really increase the score.
30% of the FICO score is based on available credit. So the best account that can be added is a long-standing, paid as agreed, revolving credit card account with a really high limit and really low balance giving it a good utilization ratio.
Help your clients understand the importance of authorized user accounts, so they can maximize their credit score potential.