Mortgage loan agreement

Will Being an Authorized User Affect Your Mortgage Application?

Gaining authorized-user status on someone else’s credit card can be beneficial in increasing your FICO scores in Utah. If you have a thin file, you can become more creditworthy over time if the primary account holder has a positive payment history and an old credit card and maintains low credit utilization consistently.

While being an authorized user can speed up the credit-building for you, it can compromise your chance of qualifying for a home loan in Ogden, Provo, Orem, or Salt Lake City. It might not single-handedly cause your denial, but it is likely to play its role, especially when you lack impressive credentials, to begin with.

Here’s why you should consider removing yourself from another person’s credit card ahead of your mortgage application:

The Lenders Might Think That You Are Not as Creditworthy as You Appear

Let us face it: Being an authorized user of someone’s card does not inspire optimism. A lender can instantly cast doubt on your creditworthiness if you have been riding on another person’s credit information for a long time.

Whether or not you pay the primary account holder money to reimburse your expenses, a conservative lender might deem you a risky potential customer regardless of how you handle your finances.

If you want to convince your prospective lender that you are worthy of a massive loan, it is imperative to avoid doing anything that can break your aura of financial responsibility and reliability. More often than not, entering the mortgage process as an authorized user of another person’s credit card is going to blemish your image.

The Primary Account Holder Might Be Irresponsible

Mortgage loan concept

Joining a credit account is beneficial only when it has no weaknesses. Ideally, it should have been open for a long time, be used modestly, and be paid on time and in full. Otherwise, being an authorized user is going to backfire on you.

Since the primary account holder might not agree to let you see their credit reports, you have to be more mindful of your own. If you do not, you might be surprised that your FICO scores are far from excellent because of another person’s poor financial habits.

Again, remove yourself from anyone else’s credit card and go solo, or else you might pay for someone’s sins at the worst possible time.

The Credit Bureaus Can Include Negative Information on Your Reports

Fortunately, not all credit bureaus punish an authorized user with another person’s bad deeds. Companies like Experian exclude the negative payment history of the primary account holder from an authorized user’s credit report.

Some credit-reporting agencies are not so considerate, though. You can’t roll the dice and hope that your mortgage lender will look at credit reports that do not contain negative items caused by another person.

The advantages of being an authorized user are undeniable, but the drawbacks should not be overlooked too. Take your name off someone’s credit card strategically to minimize its impact on your FICO scores before you apply for a mortgage.

Archives

Most Recent Post

divorce

The biggest casualties in divorce end up to be the kids. While busy dealing with their

Read More

Categories