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How You Can Boost Your Credit Score by Becoming an Authorized User
Is your credit score lower than you’d like it to be? Or do you have a limited credit history? If so, you aren’t alone. Whether you are young and have not built credit yet or you just have not had an opportunity to prove your creditworthiness yet, thousands of American’s just like you looking for ways to bolster their credit history and boost their credit score.
Luckily, there is a simple way to give your credit score a boost and it all starts with becoming an authorized user. Below, we’ll explain what an authorized user is, how to become one, and how doing so can raise your credit score fast.
What is an Authorized User?
Maybe you have a loved one who’s in the opposite scenario—they have a high credit score and have been managing their credit accounts flawlessly for years. Wouldn’t it be nice if their excellent credit could rub off on yours?
That’s where becoming an authorized user comes in. An authorized user is someone who is authorized to use another person’s credit card account.
In addition to making credit card purchases, authorized users get to:
- Receive a credit card with their name on it that’s tied to the account
- Have the account’s credit activity reported under their name to the credit bureaus (Experian, Equifax, and TransUnion)
Since all the credit account’s activity gets reported under the authorized user’s name, they get to piggyback off the primary account holder’s credit history.
What Can’t an Authorized User Do?
While authorized users are allowed to use the credit card account, they can’t make major changes to it, such as:
- Adding additional authorized users
- Requesting credit limit increases
- Redeeming rewards
- Closing the account
They also don’t have any legal responsibility to make payments on the account. Of course, many authorized users will agree to pay their primary account holder back for any purchases they make. However, the primary account holder is the only person who is legally responsible for charges made on the account.
Who Can Become an Authorized User?
Technically, anyone can become an authorized user. There’s no formal application process involved. All you have to do is find someone willing to add you as an authorized user to their credit card account.
Since primary account holders take on financial risk by adding authorized users to their accounts, they usually only add people who they know and trust, such as family members or close friends.
Here are some common authorized user examples:
- A parent adds their teen or college-aged child as an authorized user to give them a reliable payment method to use in emergencies
- Someone adds their significant other as an authorized user to help them boost their credit score
- A business owner adds an employee as an authorized user on their business credit card account to simplify the payment process for business-related purchases
How to Be a Responsible Authorized User
If a loved one adds you as their authorized user, it’s important to remember that they are doing you a big favor. In turn, you should use your authorized user privileges responsibly. To be a responsible authorized user, you and the primary account holder should discuss:
- Will receive the credit card with your name on it (you don’t need to use this credit card to get the credit history benefits from being an authorized user)?
- Can spend any money on a credit card?
- What is your spending budget (some credit card companies even allow primary account holders to set monthly spending limits for their authorized users)?
- How and when you will pay them back for any purchases you make?
- How long do you intend to stay on their account as an authorized user?
Respecting your loved one’s wishes is very important. They will regret adding you to their credit card account if you rack up a huge balance on it. After all, they’re the ones ultimately responsible for paying it off, even if you agree to pay them back.
If you’d rather forgo the temptation and responsibility of having a credit card tied to their account, simply ask them to keep the credit card with your name on it in their possession.
Who Should You Ask to Add You as an Authorized User?
Just because your dad, brother, or girlfriend is willing to add you as an authorized user doesn’t mean you should take them up on it. If your goal is to boost your credit score, you need to choose a primary account holder who has excellent credit.
Excellent credit users exhibit the following financial habits:
- Make credit card payments on time every month
- Maintain a low credit utilization (never spending more than 30% of their credit limit)
- Have a long history of using credit (at least a few years)
How to Become an Authorized User
Once you’ve found a creditworthy primary account holder, all you have to do is ask them to add you as their authorized user. They’ll have to take care of the rest of the process. Fortunately, it’s a very simple one.
All the primary card user has to do is:
- Ask their credit card company to add you as an authorized user by phone or online (doing so is usually free, though a few credit card companies may charge fees)
Provide your name, birth date, and social security number to their credit card company (so it can start reporting the account’s credit activity under your name to the credit bureaus)
Wait for their credit card company to mail out a credit card with your name on it
- Either give you this credit card or hold onto it, depending on your arrangement with them
How Being an Authorized User Can Boost Your Credit Score
Building credit takes time, but just how and when will your authorized user status start benefiting your credit score?
After becoming an authorized user, your credit report should start showing all of the credit account’s information by the next billing cycle,1 this includes:
- Payment history
- Credit limit
- Credit balance
- Age of account
This credit report data will then be factored into your credit score. As long as this information displays creditworthiness (on-time payments, low credit utilization, long account age, etc.), it can give your credit score a notable boost.
Due to these credit score benefits, nearly half of all authorized users have credit scores of 680 or above.2 Credit scores in this range are considered “good” by most lenders.
Note: For any of these benefits to occur, the credit card company must report the account’s credit activity under your name to the three major credit bureaus. Otherwise, being an authorized user won’t have any impact on your credit score.
How Long Do You Need to Be an Authorized User to See Credit Score Improvements?
If you don’t have any credit history yet, it will take at least six months of being an authorized user (or using a credit account that you open on your own) to generate an initial credit score.
If you already have a credit score, your authorized user status can start improving it within 30 to 45 days. A study by Credit Sesame discovered that authorized users with fair credit scores saw 11% increases in their credit scores within three months.3
Keep in mind that any credit score boost you receive will only persist as long as you remain an authorized user on the credit card account. Once you’re removed from the account, all of its credit activity will fall off your credit report.
As a result, it’s a good idea to use your new-and-improved credit score to open up a new credit account in your own name. You’ll most likely qualify for one with more favorable terms, now that your credit score has increased.
Can Being an Authorized User Ever Hurt Your Credit Score?
If you choose a creditworthy primary account holder, becoming an authorized user should only ever benefit your credit score. However, your authorized user benefits may decrease if the following events take place:
- The primary account holder is late on a payment
- One of you overspends and increases the account’s credit utilization significantly
- The credit card company reduces the account’s credit limit, spiking its credit utilization
Fortunately, most of these events will only decrease the benefit you receive as an authorized user. They usually won’t lower your credit score below what it was before you joined the account.
If it does lower your score, you can always request to be removed as an authorized user. Some credit card companies will allow you to fulfill this request on your own, while others may require the primary account holder to do it for you.
Start Raising Your Credit Score Today
As you can see, becoming an authorized user is an easy and efficient way to enhance your credit history and raise your credit score.
About Certified Credit
At Certified Credit, we know you and your customers are more than just a score. That’s why we offer credit-related tips and tricks for borrowers and lenders so that your decisions lead to the best outcomes. We also provide a comprehensive suite of credit-related solutions, including affordable credit reports, for mortgage lenders. Learn more about our services today.
1WalletHub. Authorized Users on Credit Cards: FAQs.
2Forbes. Will Being an Authorized User Help You Build Credit?
3Credit Sesame. How Does an Authorized User Affect Your Credit Score?