How does it boost my score?
Your credit score is a numerical calculation of your credit worthiness. When you purchase items or borrow money using credit, your lender sends details of the account and your payment history to the three credit bureaus: TransUnion, Experian and Equifax. Your information is then put into a complex formula to determine your FICO score, and that score represents your level of credit risk to new lenders when you apply for credit. The higher your score, the lower risk you represent and the higher your chances are for loan approval and preferred interest rates.
Your credit score is broken down into the following factors:
- 35% of your score is based on your payment history
- 30% of your score is based on your debt ratio, which is how much of your current available credit you are using.
- 15% of your score is based on the length of your credit history
- 10% of your score is based on new credit
- 10% of your score is based on the variety of the types of credit that you use (ie, revolving, installment, etc).
When you add an authorized user tradeline to your credit report, you are adding positive payment history, length of time you have established credit, and showing responsible use of credit by having an account with a low debt ratio. These are the factors that contribute to the 30 to 60 points average increase that we see with qualified authorized users.