When someone close to us is struggling financially, our natural instinct is to help. But sometimes what seems like a simple solution can create more problems than it solves. This is especially true when it comes to credit and finances.
I recently came across a question about a woman who wanted to add her sister (who’s going through a divorce) as an authorized user on her credit card—without actually giving her the card—just to boost the sister’s credit score for a home refinance. My immediate reaction? Red flags everywhere.
This well-intentioned but misguided approach to helping family members with their credit is something I’ve seen backfire too many times. Dave Ramsey, the personal finance expert, would call this “money enabling” rather than truly helping.
The Hidden Dangers of Authorized Users
When you add someone as an authorized user to your credit card, their credit history becomes intertwined with yours. This means any financial missteps on either side affect both parties. Even with the best intentions, this creates unnecessary risk.
For the person with good credit (in this case, a score in the 800s), you’re putting your excellent financial reputation on the line. For the person struggling, you’re creating an artificial credit boost that doesn’t reflect their true financial situation.
The truth is that credit scores should improve naturally through consistent, responsible financial behavior:
- Making on-time payments
- Reducing debt
- Maintaining low credit utilization
- Building a history of financial stability
Shortcuts might seem helpful in the moment, but they don’t address the underlying issues.
The Better Way to Help Family in Financial Crisis
If someone you love is going through a tough financial time like a divorce, there are better ways to support them than entangling your finances:
First, be honest about what’s actually affordable. In the case of the divorcing sister, refinancing to keep a house she potentially can’t afford on her own might not be the best move. Sometimes the hard truth—that selling the house might be necessary—is the most helpful advice.
Financial band-aids often delay necessary decisions and create bigger problems down the road. By artificially boosting someone’s credit score, you might be helping them take on debt they can’t truly handle.
Second, if you genuinely want to help financially, direct assistance is cleaner and clearer than credit schemes. A straightforward loan or gift with clear terms causes fewer relationship complications than becoming someone’s “credit babysitter.”
When you need help financially from a friend, simply say, “I need some money.” That’s the cleanest, clearest approach.
Complicated arrangements where one person holds the financial power (like keeping the credit card while someone else is an authorized user) create unhealthy dynamics. When the inevitable disagreement happens, the relationship takes the hit.
Setting Healthy Financial Boundaries
The most loving response to requests that entangle your finances with someone else’s is often a kind but firm “no.” You can say something like: “I love you too much to risk our relationship with a financial arrangement that could hurt us both.”
For someone going through a divorce and needing to refinance, the healthier path forward includes:
- Working with a financial advisor to create a realistic post-divorce budget
- Making all payments on time to naturally improve credit
- Considering whether keeping the house is truly the best financial decision
- Exploring refinancing options after establishing independent financial stability
This approach might take longer, but it builds true financial independence rather than creating new dependencies.
Financial entanglements with family and friends rarely end well. The best support we can offer loved ones in financial crisis is honest advice, emotional support, and perhaps direct assistance with clear boundaries—not schemes that blur financial responsibilities and create new risks for everyone involved.
When it comes to credit and family, keeping clear boundaries isn’t being selfish—it’s being smart. Sometimes the most caring thing we can do is help someone face their financial reality rather than helping them avoid it.
Frequently Asked Questions
Q: Does adding someone as an authorized user on my credit card affect my credit score?
Yes, it can. When you add an authorized user, their credit history becomes linked with yours. If they have poor credit history or if they make charges that affect your credit utilization ratio, your score could drop. Even if they don’t physically have the card, the financial connection still exists in your credit reports.
Q: What’s a better way to help a family member improve their credit score?
Instead of adding them to your accounts, help them establish good financial habits. Encourage them to make on-time payments, reduce existing debt, and possibly open a secured credit card in their own name. You could also suggest credit counseling services that provide guidance without creating financial entanglements between you.
Q: How long does it typically take to improve a credit score naturally?
Credit improvement is a marathon, not a sprint. With consistent on-time payments and debt reduction, someone might see modest improvements in 3-6 months. More substantial improvements typically take 12-24 months of responsible financial behavior. The timeline depends on the severity of previous credit issues and current debt levels.
Q: What should someone do if they can’t qualify for a mortgage refinance due to poor credit?
They should first determine if keeping the home is truly affordable in their new financial situation. If it is, they might consider a temporary higher interest rate while working to improve their credit, looking into FHA loans with more flexible requirements, or finding a non-occupant co-borrower (though this carries its own risks). In some cases, selling the home and finding more affordable housing might be the wisest financial decision.
