Will becoming an authorized user help build your credit?

07/02/2021
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Authorized user status can boost your credit

Being an authorized credit user can help your own credit.

Maintaining and building strong credit are major responsibilities that determine whether you can receive a loan, credit card, mortgage, and other credit products.

It’s important to know how authorized user status affects credit health, especially if you’re seeking to improve your credit.

What does it mean to be an authorized user?

An authorized user is someone who is permitted to make purchases on another’s credit account.

If you’re an authorized user, a credit card with your name on it will be produced that is connected to the other person’s line of credit. It will be delivered to the primary account holder, who will then give it to you.

While you’re authorized to spend from the account, you’re not obligated to pay off the debts that accrue on the card. This duty is still assigned to the primary account holder or credit account owner.

Granting someone authorized user status helps them build a credit history and cultivate good credit habits. It demands trust. This status is typically granted to family members and really close friends. It’s ideal if the authorized user’s credit report has no recent defaults, and the credit account owner has a long history of timely payments.

Becoming an authorized user will help build your credit. However, this is dependent on a few factors.

Will being an authorized user build my credit?

While becoming an authorized user helps build your credit, it doesn’t do it automatically. In order for the status to have a positive effect, the card issuer must report authorized users to credit reporting agencies. Additionally, the credit account owner and the authorized user must maintain good financial habits while using the account.

For your status as an authorized user to affect your credit, the card issuer needs to report the authorized user account to the credit reporting agencies. When this is not the case, the shared account will not be acknowledged by the bureaus or appear on credit reports, leaving the credit unaffected.

This factor is a prerequisite. Without it, your credit won’t budge.

Even if the authorized user shows up on a credit report, the efforts are wasted if healthy financial habits are not applied. Since the account is shared, the actions of one person affect the credit of both.

Do you both make timely payments and fully pay off balances? Is a low credit utilization ratio maintained? As long as you both use the account responsibly and avoid elements that can cause your credit to plummet, being an authorized user will favor your credit.

Becoming an authorized user can work wonders for your credit, as long as the two factors discussed are present. Whether you’re new to the credit game, or you’re trying to rebuild your credit, piggybacking on another person’s account might be just what you need. Do you want to find other strategies to improve your credit? Reach out to Consumer Attorneys.


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