What If I Cut my Credit-Card Cord?

If you're authorized to use your parents' credit card, there may be negative consequences when your right to that card is canceled.

By Joan Goldwasser, Senior Reporter

From Kiplinger's Personal Finance magazine, June 2009

Q: I am a recent college graduate currently listed as an authorized user on my parents' credit cards, plus I have two cards of my own. Can I have my name removed from my parents' cards without hurting my credit score?

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Changing your status as an authorized user of your parents' cards will likely have a negative effect on your credit score. When your name is removed from your parents' accounts, the credit limits for those accounts are no longer part of your total available credit. That affects your "credit utilization" -- one of five components of the FICO score, the most widely used measure. Credit utilization makes up 30% of the FICO score, so your score could drop if you are using a higher percentage of the credit limit on your own cards than you and your parents are using on all of the cards. (The FICO score is unable to distinguish between your spending and theirs.)

If you do not plan to make a large purchase for a year or two, relax. "Your credit score matters only if you are applying for credit," explains Barry Paperno, consumer-operations manager at FICO. Your credit history as an authorized user will remain on your credit report for up to ten years after your name is deleted. But if you prefer, you may have it deleted immediately.

For $15.95, you can purchase your credit report and score at MyFico.com, which entitles you to use its credit simulator for 30 days and calculate how much altering your status will affect your score.

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