Raise Your Credit Score by Becoming an Authorized Credit Card User

If you’re looking for ways to positively build your credit profile, and subsequently raise your credit score, you may want to consider becoming an authorized user on someone else’s credit card. This approach to credit building has its pros and cons, and it’s certainly not the best approach for everyone, but it just might be for you. If your credit history is relatively new, and you need a credit boost, becoming an authorized user could be the short-term solution and a good start to long-term credit success.

What It Means to Be an Authorized User

To become an authorized user, you must be added to another person’s credit card. It’s as simple as that. Once the primary card holder approves authorization with the bank or card issuer, you will get your own card (with your own name on it). As an authorized user, you’ll have limited privileges, but the big one is that you’ll have convenient plastic to use and a credit limit to abide by.

Note that as an authorized user, repayment of balances and monthly payments are not up to you — this remains the primary card holder’s charge. For example, parents who have added their children to one of their cards. Who pays the balance? Not the child. Also note that while being an authorized user on a responsible card holder’s account can help build a credit profile, the reverse is also true if you happen to become an authorized user on an irresponsible user’s card.

Pros and Cons of Becoming an Authorized User

As said, there are definite credit benefits to becoming an authorized credit card user. Depending on your situation, the pros can overcome the cons. Let’s compare the potential benefits and pitfalls of becoming an authorized card user. As you work to establish your own credit worthiness, how exactly does being on someone else’s card help? To get the most out of being an authorized user, you’ll want to be associated with a credit card that is defined by the following:

• On-time payments
• Low debt-to-credit ratio
• Spending power

On the other side, you’ll want to steer clear of becoming an authorized user on a credit card with a history of:

• Missed payments
• High debt-to-credit ratio
• Collections

Essentially, the benefit of becoming an authorized user will largely depend on the primary account holder’s own credit; and (of course) the card you will be added to.

One of the easiest ways to positively impact a credit score is to make payments on time. By doing so, you let lenders know you’re responsible, a lesser credit risk. Thus, as an authorized user, you’ll want to above all else, make sure you’re on a card that gets paid on time and if possible, paid off each month.

As you weigh your options, you’ll also need to make sure the card you’re added to reports authorized users to the credit bureaus. Ask the primary card holder to check for this as it will do you no good to be added to a card in which the credit bureaus will never know of. The objective of becoming an authorized user is to help build your nascent credit profile; this goes out the window if efforts are done so in vain.

On this score, it’s important to again note that becoming an authorized user is a more effective approach for those who are new to the world of establishing credit. For someone with a credit history, who’s trying to reestablish good credit standing, the authorized-user approach will help less.

Becoming an Authorized User Is a First Step

For anyone who’s trying to improve their credit, you should explore every avenue and take proactive measures to get your credit on the good side of the credit spectrum. In addition to becoming an authorized user, also research secured credit cards or store credit cards. Secured cards require a deposit, which will then become your credit limit, but will 1) keep you from overspending and 2) associate a credit line with your name. Every time you make an on-time payment, it directly impacts your credit score.

And so, as you begin to build your credit (which will follow you your entire life and impact everything from employment to renting an apartment to securing a mortgage), consider becoming an authorized user on a responsible card holder’s account, as well as getting other types of starter credit such as a secured bank card or a retail card. Each is a path to building personal credit; however, the positive impact of each will depend on how the credit is managed.

Paying off balances and keeping debt-to-credit ratios low will increase spending power and positively reflect on the card holders, which as an authorized user is indirectly you. And in the case of secured or store cards, it is you.

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