When to Take Your Name Off Someone Else’s Credit Card

credit card

credit cardBeing an authorized user on another person’s plastic can help you build your credit fast in the Beehive State. It allows you to thicken your file more quickly as you begin to learn how to manage your finances. Although you are sharing the credit card with the primary holder, you are not held liable for the balance.

Despite the apparent advantages that your authorized-user status gives you, you ought to remove your name on the credit account at some point. Otherwise, it can jeopardize your chance of qualifying for a Utah mortgage or any other type of credit in the future.

Since removing yourself as an authorized user on another person’s credit card can pull your FICO scores down, it is imperative to time your request correctly. Here are the times when you should consider taking the initiative:

You Want to Use Plastic More Often

Sharing a credit card with someone increases the risk of going over the usage threshold. Many experts say that the credit utilization rate should stay below 30%, or else the FICO scores of the card users will go down.

If you want more freedom to use your plastic (and enjoy the perks that come with it), maybe you should get your own. But then again, being an authorized user on another credit card does not necessarily disqualify you when you ask to open an account for yourself. You can even keep your authorized-user designation even if you start using your plastic.

The only reason you should cut ties with the other person’s credit account is to avoid excessive credit utilization because of the actions made by that person.

You See the Primary Cardholder’s Negative Information on Your Credit Reports

Speaking of frown-upon financial activity, you should separate yourself from the primary cardholder when that person’s negative information begins to appear on your credit reports. People change, and even model consumers can become abusive credit card users over time due to particular circumstances.

Some credit bureaus are considerate enough to include the bad behaviors done by the primary cardholder in your credit reports. Since not all of them observe such practice, it might be better for your credit if you end your days as an authorized user.

You Plan to Apply for an Installment Loan Soon

Installment Loan

The whole point of asking someone to add you as an authorized user on their credit card is to be an attractive customer to creditors down the road. However, lenders are usually not keen on doing business with customers piggybacking on the credentials of others, especially when lots of money is involved.

If you are planning to apply for an auto loan or a conventional mortgage sooner rather than later, demonstrate financial independence ASAP. Use the time to establish your credibility as a consumer unaffiliated with any other person’s credit and recover the FICO score points you lose because of your removal.

An intelligent consumer knows how to push the benefits of being an authorized user on another person’s credit card and when the right moment to go solo is. Mull over your financial goals and review your credit reports regularly to make an informed decision.

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