Episode Transcript
[00:00:00] Speaker A: It is take control Tuesday. That means Mansa Moussa is on the phone with me and Mansa, we've talked about it in the past, but I want you to kind of explain this. What is an authorized user and how you can make an authorized user work for them and for you.
[00:00:18] Speaker B: Yeah, you know, the authorized user. This comes with credit cards. When you have a credit account, you have the ability to authorize other people to use the account. They're not responsible for the bill. You are, but they have the credit just like you do. So let's talk about how you can make the authorized user work for you. First of all, we're getting ready to make something out of nothing. You can make other people credit worthy without risk to your own credit. Now here's the power of the authorized user. First of all, for this to work, you've got to have excellent credit. And that means a 780 and above. So if you don't have that, then this is another reason why you want to try to strive to get excellent credit. Now the other thing about this strategy is it's not necessarily a quick fix. Okay, but it's a long term growth strategy. Doing this will not automatically fix someone's credit immediately, but it will definitely improve their credit over the long term. Once again, as a person with excellent credit, you should expand your access to credit annually. You should be constantly raising your credit limits and your ability to borrow. Once again, because you have credit don't mean you have to use it. And it is better to have it and not need it then to need it and not have it. Now here's how an authorized user works. You designate someone as an authorized user. When that happens, your trade line, your account reports to their credit report.
[00:02:15] Speaker A: Okay?
[00:02:16] Speaker B: And if your credit card is well managed, it probably is. If your credit score is 780 or above, then your credit utilization is added to theirs. Now let me give you an example. So you've got somebody that's struggling right now. They've got a $500 limit on their credit card and they've got $400 on it. Well, you know, that's 80%. That's not helping their credit score. In fact, it's hurting. Yes, you make them an authorized user. You have a $5,000 credit limit and no balance. Now on their credit report. Their account still reports 500 400, but their total authorization is now 5500 with only a balance of 400.
[00:03:08] Speaker A: Wow. Yeah.
[00:03:09] Speaker B: So the proportion goes down and all you did was make them an authorized user. You didn't give them access to the account. You can control that, and their credit score improves. Now, here's the thing. That's 30% of your credit score right there on credit utilization ratio. So just doing that, and if you make somebody an authorized user or multiple accounts so multiple good trade lines will report to their credit score, you can help them. But here's the other thing, Randy. They also get all of your seniority and your payment issues.
[00:03:46] Speaker A: Oh.
[00:03:47] Speaker B: So once again, if you have a 780 and plus credit score, I'm assuming you've already paid your bills on time. You've had credit for a while. So those two factors, payment history and length of credit history, they combine for 50% of your score. So you can impact 80% of someone else's credit score just by making them an authorized user.
[00:04:16] Speaker A: Wow.
[00:04:17] Speaker B: And here's what happens. You can help someone else get mortgage ready because this will boost their score. In my experience, Randy, I have seen a 22 year old looking to get a mortgage walks in with more than seven years of credit history because of the authorized user lines. That is amazing and at no risk to you. Here's how authorized user works. You call your credit card company or you use your app. You give them the person's name, their Social Security number. The credit card company sends you the credit cardinal with their name on it. Don't give it to them. Shred it right there. Now, all that's happening is, however, your activity is on that credit card. That's what's reporting to the credit bureau. The final word, if you're getting ready to go through some hard times or ruin your credit utilization ratio, you can remove someone as an authorized user just as easily as you can put them on. And once you remove them, the account will no longer report to their credit.
[00:05:28] Speaker A: Those are all great final words, by the way, because those were questions that I had. And if you want to find more information from take control Tuesday, make sure you go to our archives, which is take controlTuesday.com dot mansa. That was some great information. Thank you.
