Credit repair can take longer than expected. When a credit report reflects a low score, it is time to get help. Consumer credit consultancy services often recommend joining a friend or family member as a joint account holder to improve a credit score. Getting out of debt is hard. By taking actionable and practicable steps to correcting a credit report, the damage from a bankruptcy or collections debt is partly alleviated with a secondary user.
The Authorized User Strategy
Friends or family members willing to assist a consumer in raising their credit score will find that one of the easiest solutions to repair is the secondary user strategy. Signatory of joint account holders in good standing can raise a credit score. Joint users are named on another credit card holder’s account.
The joint account holder strategy supports a consumer in rebuilding their credit. Since joint account holders may not be eligible for the same terms and conditions to credit, not to mention the same limits on credit card and other credit bearing instruments, their chance of improving their credit rating in a year or two is far lower. Secondary users benefit from better credit limits, interest rates, and of course, credit standing.
If a joint account strategy is planned and executed properly, the process of rebuilding credit results in positive improvements. The most effective method of raising a credit rating without risk is for both users pay their financial obligations on time. In such case, both scores will rise. The key is to avoid adding more debt to either consumer record. New credit relationships should not exceed a reasonable debt to income ratio to make the most of a secondary user strategy.
For secondary users, once the joint account is added to a credit report, improvements should be seen right away. Existing accounts with a history of timely payment and a low balance to the limit ratio, will boost a secondary user’s credit rating without the stress of other rebuilding strategies. The future of a joint account holder’s FICO score is based on designated metric review of the new account. Recognition of the new account by the FICO system results in reporting to the three credit bureaus.
Terms to the Authorized User Relationship
The potential to reinstate credit worthiness is a gift. Secondary users with a bankruptcy on their record may be viewed as a risk, yet another account holder can avoid the perils of ruined credit by establishing rules to the relationship. If a joint account holder appears to be too much of a risk, signatory without allocation of an actual card makes sense until the joint account holder has repaired their credit enough to evidence good financial habits.
Financial health is an important criteria to employment, lending, and other key life decisions such as housing rental or purchasing an automobile. The fact that individuals with a bankruptcy on their record are unable to access the benefits of basic financial services, not to mention favorable evaluation of credit record on major transactions, means that up to ten years of their life will be more challenging than average.
Broker services offering secondary user relationships to consumers are another potential source of rebuilding relationship with similar terms. The upside to joint account holder strategy is that if a new card is not issued, there is no damage done to the primary cardholder. Moreover, without access, the secondary user is not liable for purchases on the card under these agreements.
Whether a joint account holder on a family or friend’s account, or via a broker, the secondary user usually never has access to a physical credit card linked to the actual account. Secondary users have no permissions to the account.
Liabilities to Authorized User Relationship
When primary cardholders succumb to debt overages, the potential for a joint account holder to sustain damage from the relationship is moderate. Depending on the level of financial burden assumed, and number of missing payments or months exceeding an account limit, a secondary user may find that the relationship is no longer beneficial.
Liabilities from a secondary user relationship where the account holder impacting both credit reports, can cause long term detriment to a credit rating. Removal of an joint user from a primary cardholder’s credit relationship is advisable if the current activity is resulting in damage. By eliminating a joint user name from a credit card or other credit bearing instrument, the secondary account holder is removed from all future credit reporting.
Managing a joint account relationship with continuous monitoring of a credit rating with the three major credit bureaus reduces the potential risk of bad activity turning into long term, poor standing on credit record. Avoiding credit default at all costs may result in the secondary user paying part of a primary cardholder’s balance.
Remember, monthly, on-time payments according to schedule at a designated amount reflects responsible credit management. Paying off monthly balances to ensure that an account is under 50% of the total credit limit is a good rule of thumb. The main objective to an joint account relationship is achieved when proper credit to payment equilibrium is shown. An authorized credit score will increase through participation with a primary cardholder with smart financial management.
For more information about the joint account strategy, consult with a consumer credit specialist. Credit education offers the details to secondary user strategy in comparison with other credit rebuilding tactics. Repair your credit by becoming a joint account holder. If a family or friend is out of the question, find out about broker services providing authorized user credit rebuilding agreements.
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