Becoming an authorized user on the credit card of someone with good credit is an effective way to build credit as a newbie. The only catch is, if the person makes late payments or misses any payments, it will affect your credit score too.
Becoming an authorized user helps with the length of your credit history, which accounts for 15% of your FICO® Score, but is a less influential factor in your VantageScore®. This may not seem like much of a difference, but in the long run, the length of your credit history can also help lenders decide favorably on approving your loans.
A 2018 Credit Sesame survey found that people with bad credit who were added as authorized users saw a 24% increase in their FICO Score in 6 months and a 30% increase in 12 months. The lower your starting credit score, the more you benefit from being an authorized user.
However, there are many lenders who do not consider credit scores accumulated by authorized users as valid unless it is through a reliable primary cardholder like a parent or spouse. This is because they see it as an unfair advantage given to someone with bad credit to build their scores without doing the work of being a responsible spender. So, you may not get approved for a loan or credit card even if you have a good score if all your points have been accumulated through being an authorized user.
It is also a good idea to check if the lender reports to all major credit bureaus – Experian®, TransUnion®, and Equifax® – to help you make the best decision on whether to become an authorized user.
FAQs
For starters, keep in mind that being an authorized user might not impact your credit score at all. In order for a credit account to impact your credit score, it must be reported to the credit bureaus.
Will my credit limit increase if I add an authorized user? ›
If you have balances on credit cards of your own, adding an authorized user account with a high credit limit and/or a low balance could lower your utilization rate and benefit your credit score: The total amount of credit available to you will increase by the amount of the unused credit on the card (and your total ...
Will authorized user status help you build credit? ›
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.
Does becoming an authorized user count as a hard inquiry? ›
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'.
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.
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.
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.
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.
Usually, this is a trusted friend or family member who's seeking a way to build up their credit. You do not need to have a credit check done or have a positive credit score (or any credit score), to become an authorized user, making it a good option for those looking to improve or establish their credit score.
Do authorized users get lounge access? ›
Authorized users also gain access to most of the credit card's benefits, such as airport lounge access, rental car protection, purchase protection and other perks. While authorized users receive their own credit card, they do not have all the same permissions as the primary account holder.
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 adding an authorized user hit their credit? ›
If your credit card company doesn't report authorized users, adding them to your account will have no impact on their credit score. If, on the other hand, your credit card company does report authorized users, it can help them start building up credit.
Do authorized users show up on credit report? ›
A card issuer must report the authorized user account to the three nationwide consumer reporting agencies (Equifax, TransUnion and Experian) in order for it to appear on your credit report. If the card issuer does not report the activity, being an authorized user will have no effect on your credit.
