Does Authorized User Count Toward the 5/24 Rule?

When applying for credit cards, individuals often wonder how authorized user accounts affect their eligibility. Understanding their treatment is important for those seeking new credit.

Understanding the 5/24 Rule

A significant guideline in the credit card landscape is the “5/24 rule,” an unofficial policy primarily associated with Chase Bank. This rule indicates that if an applicant has opened five or more personal credit card accounts across any financial institution within the last 24 months, their application for most Chase credit cards will likely be denied. This policy aims to mitigate risk and discourage “credit card churning,” where individuals open numerous accounts primarily to earn sign-up bonuses.

The count for the 5/24 rule includes all personal credit cards appearing on a credit report, regardless of the issuing bank. This encompasses active and closed cards. Certain store-specific credit cards that report as full credit lines to major credit bureaus also contribute to this count. However, many types of loans, such as mortgages, auto loans, and student loans, do not factor into the 5/24 calculation. Similarly, most business credit cards are excluded from the count, provided they do not appear on an individual’s personal credit report.

Authorized Users and the 5/24 Rule

A frequent point of confusion concerns whether authorized user accounts contribute to the 5/24 rule. Authorized user accounts do not count against an individual’s 5/24 status. The primary reason for this exclusion is that an authorized user is not the primary account holder and is therefore not legally responsible for the debt incurred on the account.

Despite this principle, authorized user accounts can sometimes appear on an individual’s credit report. This appearance might lead an automated application system to initially miscount these accounts as new primary credit lines, potentially causing a denial. Even if an authorized user account is listed on a credit report, it is not intended to be a factor in the 5/24 calculation. Manual review processes are available to clarify the nature of these accounts.

Navigating the Application Process with Authorized User Accounts

To manage potential issues, it is advisable to check your credit reports before submitting a new credit card application. Reviewing reports from all three major credit bureaus—Equifax, Experian, and TransUnion—helps identify any authorized user accounts that might be listed. This helps understand your reported credit history.

Should a credit card application be denied due to an apparent violation of the 5/24 rule, especially if authorized user accounts are suspected to be the cause, contacting the bank’s reconsideration line is a common next step. During this conversation, applicants can explain that the accounts in question are authorized user accounts, emphasizing that they are not the primary cardholder or financially responsible for the debt. This manual review process resolves the issue, leading to a re-evaluation of the application.