Here’s something you should know about us: We hate credit scores. Yep—they’re bogus. But even though they’re nothing more than a measly “I love debt” score, you shouldn’t ignore them altogether . especially since your score is tied to your credit report. Even if you’re debt-free and don’t care what big banks and lenders think of you, you still need to check your credit report for errors or signs of fraud at least once a year.
But looking through your report can be hard to understand if you don’t know how to read one or what to look for that could be a bad sign. It can be a lot to take in. But don’t worry! We’ve done the heavy lifting so you don’t have to.
Ready, set, let’s walk through everything you need to know about how to read your credit report.
Have you ever checked your credit report and noticed a cryptic “AU” listed next to certain accounts? If so, you’re not alone. Many people are confused by this abbreviation and what it means for their credit standing. In this comprehensive guide, we’ll demystify the meaning of AU and walk through everything you need to know about authorized users on credit reports.
What Does AU Stand For?
AU stands for “Authorized User”. People who have been given permission to use an account that isn’t their own are called author users. As an example, you might be an authorized user on your spouse’s credit card. This means that you can use it to buy things, but your spouse is still responsible for paying the bill.
Being an authorized user allows you to piggyback off the primary account holder’s credit history and benefit from their good standing and credit limit. However being an authorized user does not make you equally liable for the debt on the account.
How AU Status Impacts Your Credit Score
In the past, being added as an authorized user was an easy way to give your credit score an instant boost. That’s because credit card companies would report the entire account history to the credit bureaus under both the primary and authorized user’s name. So even if you had poor credit, becoming an authorized user on an account in good standing could significantly lift your score.
However, this changed in 2009 when the FICO scoring model was updated. Now, being an authorized user has a much more limited impact on your credit score. Most credit scoring models will largely ignore authorized user accounts unless there is additional corroborating information in your credit history.
Even though being an authorized user doesn’t guarantee a better credit score, it can still provide some potential benefits .
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Length of credit history: If you don’t have a lot of credit history, being an authorized user on an old, active account can help make your credit history longer.
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Credit mix: Having an installment loan like a mortgage or auto loan along with a revolving credit card looks better for your score than having just one type of credit. Being an authorized user on a credit card can add to your mix of accounts.
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Less credit use: If your balances are too high compared to your credit limits, adding yourself as an authorized user to an account with a high limit and low balance can help you use less credit overall.
Things to Consider Before Becoming an AU
While there are some potential upsides to authorized user status, there are also a few risks to consider:
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The primary user’s creditworthiness: If the primary account holder has poor credit or a history of late payments, it could negatively impact your credit through your association with the account. Check their standing first.
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Your spending habits: If you rack up charges as an authorized user and can’t pay them off in full each month, it could damage the primary user’s utilization rate and credit scores. Use the access responsibly.
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Joint liability: As an authorized user, you are not responsible for paying the bill. However, the account could appear on your report and lenders may assume you are jointly liable. This could impact your debt-to-income ratio when applying for credit.
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Difficult removal process: Removing yourself as an authorized user usually requires the primary account holder to request it. If they refuse, you may have to dispute the account with the credit bureaus.
Frequently Asked Questions
How long does it take for an AU account to appear on my credit report?
After you are added as an authorized user, it can take up to 60 days for the account to appear on your credit report. However, credit bureaus may backdate the account to the original open date.
Can authorized users spend on the account?
That depends on the policies of the credit card issuer. Some allow authorized users to freely spend up to the credit limit. Others issue authorized users a card that can only access a small portion of the total limit. The primary user controls the level of access.
Do AU accounts impact your 5/24 status for Chase?
Authorized user accounts typically do not add to your tally of opened accounts when calculating Chase’s 5/24 rule. However, it’s wise to check directly with Chase when in doubt.
If an AU makes late payments, does it affect the primary user?
No, authorized users cannot directly impact the payment history of the primary account holder. Only the actions of the primary user are reflected on their credit reports.
Can I remove myself as an AU if I don’t want it on my report?
Yes, you can contact the credit card company directly to request removal as an authorized user. The change should be reflected on your credit report within 30 days.
The Takeaway on AU Accounts
Becoming an authorized user can still provide some benefits, but it does not guarantee the instant boost to your credit score that it once did. Be very selective about the primary account holder and evaluate whether the slight potential gains are worth the risks. If you do choose to become an AU, use the access wisely and remove yourself immediately if any issues arise.
How to Read Your Credit Report
This section has any personal information that could be used to identify you, including:
- Name
- Address
- Social Security number
- Date of birth
- Phone number
Red Flags: Everything in this section needs to refer to you and not someone else who happens to share your name (looking at you, Mr. Smith). And while you’re at it, go ahead and double-check the Social Security number—just in case.
Make sure all the addresses listed are places you’ve actually lived. If you’ve never been to Waxahachie, Texas, but the report says you lived there for seven years, you definitely want to follow up on that. Later, we’ll share what steps to follow if you do find errors in your report.
The bulk of the report is in this section. Your credit history includes:
- Open and paid credit accounts, like credit cards, mortgages and loans
- Accounts shared with someone else
- Total loan amounts
- Remaining loan balances
- Late payments
- Accounts that have been sent to collections
Red Flags: Read and reread this section to make sure everything listed is correct. Got it? Okay. Now check again. Seriously. Look for any unfamiliar accounts and check for payments being noted as late (when they actually werent).
If you’ve closed a credit card account, confirm it’s showing up as closed on your credit report. Also, make sure no lines of credit have been opened in your name without your consent—that’s a huge red flag and might mean you’re at risk of identity theft.
You want this part to be blank. The financial activity listed here—like bankruptcy and judgments—is taken from public records, and some of it can stay on your credit report for 7–10 years.
Red Flags: It’s pretty rare to find an error in this part of the report, but it’s worth scanning anyway. Mistakes in this section should be cleared up ASAP.
Here you’ll see detailed listings of every business that has requested your credit report. There are two types of credit inquiries: soft and hard. Soft inquiries are just from companies wanting to send you promotional materials or current creditors checking your financial status. Hard inquiries are made when you actually apply for a credit card, loan or mortgage.
Red Flags: If you’re not doing debt anymore, you shouldn’t have any hard inquiries on your report. Any hard inquiry you didn’t authorize is a sign someone might be using your information to sign up for debt. Any old inquiries should disappear from your report after about two years.
Where Can I Find My Credit Score?
If you got a free credit check, don’t be surprised when it doesn’t include your credit score. To see that, you’ll have to use a free web service or pay for it through myFICO or another credit bureau.
Remember, when it all comes down to it, a credit score is really just an “I love debt” score. That’s right, a “good score” simply shows how well you’ve played the debt game. It doesn’t reflect your actual net worth or the amount of money you have in the bank. In other words, it’s really nothing to be proud of. The only way to keep your stellar credit score is to live in debt and stay there—no, thanks!
It is possible to live life without a credit score, which is exactly what Dave recommends. But that doesn’t mean you should trash your credit to lower it! Just start paying off your debt, close your credit accounts once they’re paid off, and don’t take on any new debt. If you’re following the Baby Steps, you should reach that indeterminable score (the term the credit bureaus use for folks who don’t use credit) within a few months to a few years. Remember: No credit is not the same as having a low credit score.