“However, if you have a credit account that's two years old and an authorized user account that's eight years old, removing the authorized user account could hurt your credit score.”
Removing yourself as an authorized user from your mother's credit card will likely impact your credit score, primarily because you will lose the benefit of the long credit history and the high credit limit associated with that account. Here are some considerations to help you minimize the impact:
No, it doesn't hurt your credit, but having one can get credit history in your name because most times without a cosigner, you're not approved for an apartment or loan.
Schulz also notes that when primary cardholders remove an authorized user on their card, the primary cardholder's credit history will no longer influence the authorized user's credit history.
The process of removing an authorized user is simple and can be done by calling the credit card issuer or sending a letter. There are risks involved in being an authorized user, such as negative financial behavior of the primary cardholder impacting your credit score.
If you discover the primary cardholder isn't making on-time bill payments, you may decide that cutting ties is the best way to go. Call the issuer and ask to have your name removed as an authorized user. It should take only a few days, and the issuer will cease making reports under your name to credit bureaus.
Your best option to get your name off a large cosigned loan is to have the person who's using the money refinance the loan without your name on the new loan. Another option is to help the borrower improve their credit history. You can ask the person using the money to make extra payments to pay off the loan faster.
It can affect your credit scores.
Because a co-signed loan is recorded on your credit reports, any late or missed payments can have a negative impact on your credit scores. If the borrower defaults on the loan and ceases payment, the debt may be referred to a collection agency.
If you, the cosigner, decide later that you no longer want your name on the loan or line of credit, it can be difficult to remove yourself. However, it's possible to remove yourself as a cosigner from a loan either by using a cosigner release form, refinancing the loan, or paying off the loan.
Being an authorized user on a credit card could affect your credit positively if the account holder makes on-time payments and keeps the credit utilization rate low. If they don't, your credit could take a hit.
It's generally best to stay as an authorized user on your parents' credit card accounts until you've built up your own credit and are financially prepared to handle your own credit card payments.
Disadvantages of being an authorized user
Limited access: Authorized users can be removed at any time, and they cannot use all of the benefits of the card. For instance, they cannot earn their own credit card rewards points and typically are not authorized to redeem them.
Summary. Removing yourself as an authorized user can lower your credit utilization ratio and the age of your credit history, both of which can have a negative impact on your credit score.
Overall, Credit Karma may produce a different result than one or more of the three major credit bureaus directly. The slight differences in calculations between FICO and VantageScore can lead to significant variances in credit scores, making Credit Karma less accurate than most may appreciate.
A 2018 Credit Sesame survey found that people with bad credit who were added as authorized users saw a 24% increase in their FICO Score in 6 months and a 30% increase in 12 months. The lower your starting credit score, the more you benefit from being an authorized user.
The lender will only consider your income when determining whether you meet the requirements. Your co-signer's income will not factor into this part of the application. So, a co-signer with bad credit but good income won't help with approval or better rates.
Many people are surprised to learn that a closed credit card account remains on your credit report for up to 10 years if the account was in good standing when you canceled it, but only seven years if it wasn't – if, say, it was closed for missed payments.
The quick answer is yes, but it's not as easy as you might think. "Lenders are generally averse to removing a co-signer," says Dean Kaplan, president of The Kaplan Group, a commercial debt collection agency. That's because by removing your name from the loan, the lender's risk goes up.
You can often remove a cosigner at any point during the loan period. Your loan paperwork might dictate specific terms, though. For example, some lenders require 24 months of on-time payments from the primary borrower before they'll consider releasing the cosigner.
On the other hand, if the account in question has had frequent late payments or carries a high credit utilization, removing an authorized user (or removing yourself as an authorized user) could give a boost to your credit scores.
No, being an authorized user generally does not obligate you to pay the debt.
Your credit utilization ratio is the amount you owe across your credit cards (and other revolving credit lines) compared to your total available credit, expressed as a percentage. In the FICO scoring model, this accounts for 30 percent of your overall credit score.