If you own a credit card, you most probably already heard the term Authorized User, but did you ever hear of a Joint or Co-Applicant? Joints and co-applicants are a much less common term in the world of credit cards, as it is not even an available option by most issuers. Here, in this post, we will go thought the key differences between an AU and a Joint.

Responsibility

The most important difference between an AU and a joint is responsibility. An Authorized User is not responsible to make any payments on the account, and is not liable to pay even if the primary card holder defaults.

With a joint, though, the primary and the co-applicant are equally responsible to make payments. In a case were the primary fails to make a payment, the bank may collect payment from the co-applicant as well.

Credit

Both, by an authorized user (in most cases) and a joint, the account will appear on the second party’s credit report. Both the good and the bad will get reported.  But there is a difference on how the account is reported. For an AU, the account will be marked as an AU, and with a joint, the account will be marked as joint. The newer credit models, starting from Fico 08 and above, do not count in AU in their scoring models. Therefore, an AU will not help build a credit score with the newer models. But a joint does get counted in, even on the new scoring models. Therefore, a joint does help with credit.

The good can sometimes be bad, too.

Being that a joint is responsible to make payments on the account, therefore it helps build credit for the co-applicant. That same fact can sometimes be a negative. Because if there is unfortunately a late payment on the account, it will be much harder to dispute that with a joint, rather than if it would have been an AU. Therefore, I only recommend becoming a joint with someone that you really trust, as you need to keep in mind that any late payment caused by the primary will, unfortunately, affect you equally.

Availability

As mentioned above, becoming an AU on someone else’s account is very easy, as its offered by almost every single credit card issuer.

As of the date of this post, a joint is only offered by three banks:

  1. Bank of America
  2. US Bank
  3. Elan Financial (also owned by US Bank).

Mortgages

Its important to note, that even though I mentioned above that AU are not counted into the newer Fico scoring models, when it comes to mortgages the older Fico 04 model is still in use. Therefore, in regard to mortgages, AU will help boost a credit score just as much as joints. Read more about this here

If you have any questions about this post just Ask Sam.

Thanks!