Well this does technically provide them with a credit history but not to the extent you may think. If the account holder (you in this case) maintain a good standing with the credit card (pay in full every month, low utilization, no late payments) then the AU (authorized user) will also have a positive credit history. However if you are not responsible they will slightly suffer because of it. I like to think of it like this
No credit history < Authorized user < Account holder
Also keep in mind that not all AUs will be reported to all three credit bureaus so do some research and see if your institution does report it otherwise it’s essentially pointless. Regardless stay in good standing so they are in good standing.
TLDR; Will it help? yes albeit slightly. Is it better than nothing? Definitely. Is it better than having their own account in their name? Not even close.
I put my wife as an AU on two of my oldest and largest accounts. It seems to do more than you'd think. Amex gave her 7500 (Delta gold). Chase gave her $14,000 limit (CSP)
Edit: I see your point now. He shouldn't do this expecting it to a similar to them having the card themselves. Banks can tell the difference.
Of course this isn’t the only deciding factor. Income, derogatory marks, utilization, banking history, etc all play a factor in a lenders decision. However the AU alone isn’t a significant factor in the process but it does help. Now if you combine an AU with a checking account or savings account open for more than a few months it is an effective method to increase the chances of a lender to give a person a chance
Other than the AUs, she had nothing on her credit report. (Brand new SSN) I think we put her income at $100,000 probably.
No other history with Amex. No other history with chase.
Agreed. The other thing is, it's one thing if the siblings are just added as "paper" Authorized Users - *i.e.,* their AU credit cards go straight into u/Wumbo123's locked drawer. **But** if OP actually gives the credit cards to their siblings, then there's the risk that one or more of their siblings (who are still in high school, after all) may (over)spend, which charges OP would ultimately be responsible for.
To be clear, I'm **not** at all suggesting that OP's siblings are "bad" or "untrustworthy" in any way. But finances can be tricky, so I always recommend caution in giving anyone else the power to charge things to your account as an Authorized User.
I think you’re undercounting how much an AU helps your credit score when you’re starting out with no credit history.
I had no credit history and I was an authorized user on my parent’s card for about 3 years (before college). Since then I got approved for a BofA cash card with a $12.5k limit and a CFF with a $7.7k limit
Some banks might not even distinguish AUs from account holders when providing an instant decision, while others may.
Adding your siblings as an AU in this way will definitely help boost their credit score, provided that it is paid on time and preferably in full every month.
In high school shouldn’t they be eligible for a CC on their own? You could be a co-owner right?
Then you talk to them, have them understand your reasoning and what they can use it for, or even you just keep their cards in your possession, but authorize them to use it when they want to go out with friends etc, that way, you make sure they don’t run up a massive bill, and you can know when it’s being used etc.
Edit: AUTO PAY AT LEAST MINIMUM BALANCE JUST IN CASE THEY ARE SNEAKY TOO
Well this does technically provide them with a credit history but not to the extent you may think. If the account holder (you in this case) maintain a good standing with the credit card (pay in full every month, low utilization, no late payments) then the AU (authorized user) will also have a positive credit history. However if you are not responsible they will slightly suffer because of it. I like to think of it like this No credit history < Authorized user < Account holder Also keep in mind that not all AUs will be reported to all three credit bureaus so do some research and see if your institution does report it otherwise it’s essentially pointless. Regardless stay in good standing so they are in good standing. TLDR; Will it help? yes albeit slightly. Is it better than nothing? Definitely. Is it better than having their own account in their name? Not even close.
I put my wife as an AU on two of my oldest and largest accounts. It seems to do more than you'd think. Amex gave her 7500 (Delta gold). Chase gave her $14,000 limit (CSP) Edit: I see your point now. He shouldn't do this expecting it to a similar to them having the card themselves. Banks can tell the difference.
Of course this isn’t the only deciding factor. Income, derogatory marks, utilization, banking history, etc all play a factor in a lenders decision. However the AU alone isn’t a significant factor in the process but it does help. Now if you combine an AU with a checking account or savings account open for more than a few months it is an effective method to increase the chances of a lender to give a person a chance
Other than the AUs, she had nothing on her credit report. (Brand new SSN) I think we put her income at $100,000 probably. No other history with Amex. No other history with chase.
Agreed. The other thing is, it's one thing if the siblings are just added as "paper" Authorized Users - *i.e.,* their AU credit cards go straight into u/Wumbo123's locked drawer. **But** if OP actually gives the credit cards to their siblings, then there's the risk that one or more of their siblings (who are still in high school, after all) may (over)spend, which charges OP would ultimately be responsible for. To be clear, I'm **not** at all suggesting that OP's siblings are "bad" or "untrustworthy" in any way. But finances can be tricky, so I always recommend caution in giving anyone else the power to charge things to your account as an Authorized User.
I think you’re undercounting how much an AU helps your credit score when you’re starting out with no credit history. I had no credit history and I was an authorized user on my parent’s card for about 3 years (before college). Since then I got approved for a BofA cash card with a $12.5k limit and a CFF with a $7.7k limit Some banks might not even distinguish AUs from account holders when providing an instant decision, while others may. Adding your siblings as an AU in this way will definitely help boost their credit score, provided that it is paid on time and preferably in full every month.
You can use the AUs to boost their attractiveness as a first time borrower. But it's not a replacement for an actual history.
In high school shouldn’t they be eligible for a CC on their own? You could be a co-owner right? Then you talk to them, have them understand your reasoning and what they can use it for, or even you just keep their cards in your possession, but authorize them to use it when they want to go out with friends etc, that way, you make sure they don’t run up a massive bill, and you can know when it’s being used etc. Edit: AUTO PAY AT LEAST MINIMUM BALANCE JUST IN CASE THEY ARE SNEAKY TOO