approved. He was thrilled. However, things took a turn when he shared his success with a friend. He added his friend as an authorized user on the new Chase card. Unfortunately, the friend had poor credit. Within a month, the account was shut down because the friend’s credit history was a problem. This caused the client to lose the credit card he had worked so hard for. If he had consulted with someone knowledgeable before adding his friend, he could have been warned about the risks. This story shows that even good friends and family can cause problems if you trust them with your account. Your credit is constantly monitored by underwriting software, which tracks all authorized users, so their actions can directly affect your credit. Be careful about who you trust with your accounts because it can harm your ability to get loans or credit in the future.
authorized user will be negatively affected. The software doesn’t distinguish who made the payments or charges; it just sees both people as equally responsible for the account. That being said, even if the authorized user is the individual making the payments, the account owner is the only one who would receive the credit. Because of this, being an authorized user is high risk and low reward. If you’re the primary account holder and you know you’ll be late on a payment, remove the authorized user from the account to protect them from the consequences.
Instead of relying on trade lines or becoming an authorized user, focus on improving your credit profile through responsible borrowing and timely payments. It may seem selfish, but protecting your credit is more important than trying to help someone else with theirs. Being careful now can help you avoid major problems later.
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MERRILL CHANDLER
AVOIDING FRAUDULENT “TRADE LINES”
Merrill Chandler, a personal and business credit pioneer and co- founder of Lexington Credit Repair Law Firm, became dissatisfied more than 30 years ago with the ineffective results of credit repair. He discovered that getting approved for personal or business credit did not rely on a credit score but, in fact, was the result of having “fundable” borrower behaviors. With the right strategies, a borrower can “optimize” their financial behaviors
It’s also risky to purchase a trade line—a practice where businesses sell access to “clean” credit accounts to people looking to improve their scores. These businesses don’t tell their customers that the trade lines belong to strangers. If you don’t know the person behind the account, how can you trust them? This is one of the many risks involved in being an authorized user. PROTECTING YOUR CREDIT When it comes to authorized users, there are many risks you should consider. Although it might seem like a good way to help someone or boost your credit, it can harm you in the long run. Always be cautious about who you trust with your accounts and remember that the benefits of being an authorized user are minimal compared to the potential negative consequences.
THE RISKS OF BEING AN AUTHORIZED USER
Being an authorized user carries a lot of risks, with very few rewards. FICO doesn’t give much weight to authorized users: only around 40% of the points the primary account holder gets. This means the authorized user only gets a small boost, but if the account goes into delinquency or is charged off, the negative impact affects both the primary cardholder and the authorized user equally. If the account is late, goes into collections, or gets charged off, both the primary account holder and the
to become highly fundable, increasing the frequency and
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amount of their credit approvals. He co-founded Get Fundable! to help real estate and business entrepreneurs nationwide grow their businesses the way they want, resulting in his students and clients becoming more fundable and getting more than $250 million in funding. If you want to learn more, check out www.getfundable.com.
24 | think realty magazine :: january - february 2025
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