Is Being Added as an Authorized User a Hard Inquiry?
In the world of credit, understanding how various actions affect your credit score is crucial. One common question that often arises is whether adding someone as an authorized user on a credit card account counts as a hard inquiry. This article delves into this topic, providing insights into what a hard inquiry is, how adding an authorized user can impact your credit, and what you should consider before making this decision.
What is a Hard Inquiry?
A hard inquiry, also known as a hard pull, occurs when a lender checks your credit report to evaluate your creditworthiness before approving you for a loan, credit card, or other credit products. Hard inquiries can temporarily lower your credit score, although the impact is usually minimal and short-lived. Typically, multiple hard inquiries within a short period can be viewed negatively by credit scoring models.
Adding an Authorized User and Hard Inquiries
Now, let’s address the main question: Is being added as an authorized user a hard inquiry? The answer is no. Adding someone as an authorized user on your credit card account does not result in a hard inquiry. This is because the credit reporting agencies do not view this action as a request for new credit. Instead, it is simply a reflection of an existing account, where the authorized user has permission to use the account.
Benefits of Adding an Authorized User
Adding an authorized user can have several benefits for both the primary account holder and the authorized user. For the primary account holder, it can help improve the credit score by extending the average age of accounts, which is a significant factor in credit scoring models. Additionally, if the authorized user maintains good credit habits, it can positively impact the primary account holder’s credit score.
On the other hand, for the authorized user, this action can help build or improve their credit history. As long as the authorized user uses the account responsibly and pays their bills on time, it can contribute to a positive credit report.
Considerations Before Adding an Authorized User
Before adding someone as an authorized user, it is essential to consider a few factors:
1. Trust: Ensure that the person you are adding as an authorized user is trustworthy and will use the account responsibly.
2. Financial Responsibility: Evaluate the authorized user’s credit history and financial habits to determine if they are likely to maintain good credit practices.
3. Potential Risks: Understand that if the authorized user fails to pay their bills, it could negatively impact your credit score.
In conclusion, adding someone as an authorized user on a credit card account does not result in a hard inquiry. This action can be beneficial for both the primary account holder and the authorized user, provided that trust and financial responsibility are considered.
