Pro Tip: How Authorized User Accounts Can Boost Your Credit

One of the fastest ways to improve your credit score is by becoming an authorized user on someone else’s credit card account. This strategy allows you to benefit from the positive payment history and credit utilization of the primary account holder without having to open a new account yourself. Here’s how this credit hack works and how to maximize its benefits.

What is an Authorized User?

An authorized user is someone who is added to an existing credit card account by the primary cardholder. As an authorized user, you’re allowed to use the card but are not responsible for making payments. The account’s history—positive or negative—is reported to your credit file, giving you an opportunity to improve your score.

Why It Works

Credit scoring models, such as FICO and VantageScore, include authorized user accounts when calculating your credit score. This means if you’re added to a well-maintained account with a long history, low balance, and on-time payments, it can significantly enhance your credit profile.

Steps to Use Authorized User Accounts Effectively

1. Choose the Right Cardholder

Not all credit card accounts will help your credit. Look for a cardholder who meets these criteria:

• A long credit history (the older, the better).
• Consistently makes on-time payments.
• Keeps credit utilization below 30%.

Make sure the person you choose is financially responsible to avoid adding negative marks to your credit report.

2. Confirm Reporting to Credit Bureaus

Not all credit card issuers report authorized user activity to all three major credit bureaus (Equifax, Experian, and TransUnion). Before being added, confirm with the issuer that the account will be reported on your credit file.

3. Use the Card Responsibly

While you may have access to the card, it’s important to use it wisely—or not at all. If your goal is to build credit, you don’t need to make purchases; you’ll benefit simply from the positive account history.

4. Monitor Your Credit Report

After being added as an authorized user, check your credit report to ensure the account is being reported correctly. Positive changes may start reflecting within a month or two.

5. Know When to Step Back

If the primary account holder’s financial situation changes (e.g., they miss payments or max out the card), it could negatively affect your credit. In such cases, remove yourself from the account immediately to protect your credit score.

The Benefits of Being an Authorized User

• Quick Boost to Your Score: Great for individuals with limited or poor credit history.
• No Hard Credit Inquiry: Unlike applying for a new credit card, becoming an authorized user doesn’t involve a hard inquiry, so your score won’t dip.
• Builds Credit Without Responsibility: You gain the credit benefits without being liable for the debt.

Limitations to Consider

• Dependent on the Primary User: Your credit is tied to their actions.
• Not All Issuers Report Authorized Users: Ensure the account activity will appear on your report.
• May Have Limited Impact: If your credit history already includes significant positive accounts, the boost might be smaller.

Final Thought

Being added as an authorized user is a powerful yet simple strategy to repair or build credit, especially for those starting fresh or recovering from past mistakes. However, it’s essential to pair this strategy with responsible credit habits, like making on-time payments and keeping your balances low.

Need Guidance?
At Max Your Credit, we specialize in customized credit repair plans and strategies like this to help you achieve your financial goals. Contact us today to learn how we can help you build the credit you deserve!