Whether you like it or not, credit is important and it’s here to stay. Most of us know that you need good credit when applying for loans or apartments. But even employers are starting to check potential employee’s credit history these days. If you’re stuck with bad credit, there usually isn’t a lot you can do to fix it quickly. It takes time which is why it pays to open lines of credit early, always make your payments on time and use a low percentage of your available limits.
That could take years though, what can you do if you need to boost your credit score quickly?
There actually is a trick that you can use that credit card companies encourage. If you’ve ever activated a new credit card, at the end of the representative’s spiel, they’ll often ask if there’s anyone you’d like to add as an authorized user. Most people just gloss over this question and and forget about it. But this is where it pays to know just how a credit score works.
Basics of Credit
Every time you open a new credit card, your score will take a hit in the average age and inquiry departments. Since you’re introducing a brand new card, this will lower the average age of all your cards. Issuers also don’t like to see too many inquiries on your report. But your score will be buoyed by adding a new account and increasing your overall credit limit. That usually isn’t enough to offset the bad though, which is why there is a 3-10 point drop every time you open a new card.
Authorized User Basics
Being added as an authorized user is just like applying for a new credit card but without the hard inquiry. Some companies, like Amex have even been known to backdate your card to the original member’s ‘member since date’. So in the past if you were added onto an account that was 10 years old, you would have actually gotten that same age. This rarely happens anymore but the myth still lives on. Amex’s official policy is that they no longer backdate but they are more than happy to accept authorized users.
As an authorized user, you will receive your own credit card that is linked to the main user’s account. The authorized user can make purchases and payments but is not able to make any significant changes to the account.
Risks of Adding an Authorized User
One thing to keep in mind if you’re considering adding an authorized user to your account is that the main cardholder will be responsible for all charges. If you have an authorized user that doesn’t pay his or her bills, you are now responsible and your credit is at risk. In order to avoid this, you could add an authorized user but never give them the actual card. They would still receive the credit benefits but you wouldn’t take on any of the risk.
Ultimately, if you’re looking to boost your credit or help a family member or friend increase their score, adding them as an authorized user makes a lot of sense. You don’t even have to give them the card to help them out. Just adding them will increase their number of accounts and total credit limit and in turn raise their credit score.
Update: We’re always getting reader questions about credit cards, but every situations is different. To make sure you get the information you need, we started our own matching service to help you find a financial advisor. Our SmartAdvisor tool can match you with as many as three financial advisors in your area in just a few minutes. All you have to do is answer about 20 questions about your financial situation. Then you can check out their profiles, interview them on the phone or in person and choose who to work with in the future.
FAQs
Adding yourself as an authorized user on someone else's credit card could help to build and establish your credit. However, there are some important factors to consider since becoming an authorized user can actually hurt your credit score if you're added on an account that is not in good standing.
Will my credit improve if I am an authorized user? ›
Becoming an authorized user can help you build your credit history and boost your credit score, but it shouldn't be the only tool in your credit-building toolbox. You should also take out credit cards in your own name and practice using those cards responsibly in order to see your score improve over time.
How fast does an authorized user build credit? ›
As with any new credit, it typically takes a month or two after you've been named an authorized user for the account to appear on your credit reports. As soon as that happens, the card's shared payment history and its age of accounts will be added to your own and will be reflected in your credit scores.
Will adding my husband as an authorized user help his credit? ›
Help Your Partner Build Credit
So, assuming your credit history and credit score are better than your significant other's, adding them as an authorized user should help boost their credit score.
Whose credit score does the authorized user get? ›
An authorized user can piggyback off the good credit history of the primary cardholder. If the primary cardholder has a long history of making their payments on time and in full, the authorized user should see that positive history reflected on their own credit report.
Why did my credit score drop when I was added as an authorized user? ›
While becoming an authorized user can help your credit, there are times when it can have the opposite effect. For instance, if you're added to an account that has a history of missed payments or the credit utilization ratio is too high, your credit score could fall.
Does removing someone as an authorized user hurt their credit? ›
Your score may drop a bit when you are removed as an authorized user, but you can improve it over time by using your own credit accounts responsibly.
Can you remove yourself as an authorized user on a credit card? ›
If you want to remove yourself as an authorized credit card user on someone else's account, take heed. You can call the credit card issuer and ask them to remove you. It's also possible for the cardholder to remove you from their account, assuming you have a good or civil relationship with them.
What are the pros and cons of adding an authorized user? ›
Key takeaways. Becoming an authorized user on someone else's credit card can be a helpful way to build credit or establish a credit history. As an authorized user, you'll be able to make purchases with the credit card. But the primary cardholder is responsible for making repayments.
Does adding my child as an authorized user help their credit score? ›
As an authorized user, your credit card will build your kids' credit history. The credit card usage and payment history will be added to their credit profile. This will help them when it comes time to apply for their own credit card or other types of credit.
How to raise your credit score quickly
- Lower your credit utilization rate.
- Ask for late payment forgiveness.
- Dispute inaccurate information on your credit reports.
- Add utility and phone payments to your credit report.
- Check and understand your credit score.
Being an authorized user can help you build credit—increasing your credit age, overall credit limit and history of on-time payments—but creditors will also want to see that you're up to the task of repaying the money you borrow.
How much will my credit score go up if someone adds me to their credit card? ›
An important point to note is that the primary account holder's credit scores will not be affected by adding you as an authorized user, even if your credit history is limited or needs work.
How long does it take for an authorized user to affect credit? ›
As long as the credit card issuer reports authorized user activity to the credit bureaus, the account will typically appear on your credit reports within a couple of months.
Does adding someone as an authorized user hurt my credit? ›
Does adding an authorized user hurt your credit? Adding an authorized user to your credit card account alone shouldn't have a negative impact on your credit. But keep in mind that if that person uses your credit in a way that hurts your financial situation, negative credit impact could follow.
Does FICO count authorized users? ›
Authorized user accounts can appear on your credit report and impact your FICO® Score. This means that both positive and negative information can impact the authorized user's score. This can be beneficial if the account is managed well, as it can help build a positive credit history.
Will adding someone as an authorized user help their credit capital one? ›
Adding a user won't impact your credit score—only the usual factors like payment history and available credit do that. As long as you and your user use your card responsibly and make payments on time, these actions can have a positive impact on your user's score.
Will adding my child as an authorized user help his credit? ›
As an authorized user, your credit card will build your kids' credit history. The credit card usage and payment history will be added to their credit profile. This will help them when it comes time to apply for their own credit card or other types of credit. Earn rewards for their spending.
Does being added as an authorized user count as a hard inquiry? ›
Once the primary cardholder adds the authorized user to their account, the authorized user has immediate access to the credit card without a credit inquiry or needing to qualify for a new account.
What are the benefits of being an authorized user on a credit card? ›
You can build your credit: As an authorized user, you can lean on another person's good credit to build your own. On-time payments made by the primary cardholder will appear on your credit history and could boost your score over time.
