If you’re new to this whole credit thing, it can be difficult to get on the scoreboard as a responsible credit user. So what can you do to jump-start your credit history? A popular suggestion is to become an authorized user on someone else’s account. But does this tactic really work?
What is an Authorized User?
An authorized user is a secondary account holder on a credit card. When you become an authorized user, you’ll receive a credit card in the mail with your name on it, in addition to the card already used by the primary account holder.
Although you are granted the ability to use the credit card, the primary account holder still assumes responsibility to view the account and make payments. Whether you agree to reimburse the primary cardholder or simply not use the card at all, the account will appear as a tradeline on your credit report.
How Does It Help My Credit?
The degree to which authorized user status can help your credit depends on many factors, including the age of the card, the utilization of the card, and whether the payment history is positive.
Being an authorized user doesn’t do you any good unless the primary account holder is trustworthy with their credit. Before requesting them for permission to add yourself as an authorized user, consider asking them if they have recently made any late payments, or whether they typically use more than 30% of their credit limit. These are indicators that you may want to look elsewhere.
Becoming an authorized user is a quick way to get the ball rolling when it comes to your credit. However, to build up your credit significantly, it takes time. If you develop a track record of paying on time and keeping your balances low, you’ll find that your credit will continue to climb.