If you are new to credit or rebuilding after a rough patch, one of the fastest ways to add positive history to your file is to become an authorized user on someone else's credit card. A parent, partner or trusted friend adds you to their account, and their payment history and credit limit can begin appearing on your credit report. Used well, it is a simple boost. Used carelessly, it can backfire for both of you.
How authorized user accounts work
An authorized user is allowed to use a card account but is not legally responsible for paying the bill. The primary cardholder stays in charge of the account and the debt. Most major card issuers report the account to the credit bureaus under the authorized user's name too, which means the account's age, limit and payment history can show up on your report as if it were your own.
How it can help your score
If the account is old, has a high credit limit, a low balance and a perfect payment record, it can raise your score by adding length of history and lowering your overall utilization. For someone with a thin file, such as a college student or recent immigrant, it can even create a score where none existed. Many people see the account appear on their report within one or two billing cycles.
When it can hurt
The benefit only works if the primary cardholder manages the account well. A late payment or a maxed-out balance will show up on your report as well as theirs. Before you agree, ask about the account's history, its typical balance and its limit. If the cardholder later runs into trouble, you can ask to be removed, and the account usually drops off your report.
Age matters too. Because the account's full history is often reported, being added to a card that was opened ten years ago can instantly raise the average age of your accounts. A brand-new card adds far less, so the oldest well-managed account in the family is usually the best choice.
Confirm the issuer reports authorized users
Not every issuer reports authorized users to all three bureaus, and some only report users above a certain age. Call the issuer or check its website before you are added. If the account doesn't report, it won't help your credit at all.
How lenders view authorized user accounts
Credit scores include authorized user accounts, but a lender reviewing your full report may notice that you are not the primary holder. Mortgage underwriters, in particular, sometimes look past these accounts. That's why authorized user status works best as a starting point, followed by your own card or loan in your name.
Be cautious of companies that sell authorized user spots on strangers' cards, sometimes called tradeline rental. It can violate card issuer rules, newer scoring models may discount it, and lenders who spot it may question your application. Stick to accounts held by people you know and trust.
Protect the relationship
Talk openly about expectations before you're added. Agree on whether you will use the card, how much you can spend and how you will repay any charges. If you are the primary cardholder, you can set a lower spending limit for the authorized user's card, and you can remove them at any time.
Next steps after you're added
Check your credit reports a month or two later to confirm the account is reporting correctly. Then begin building credit in your own name with a secured card or a starter card, keep balances low and pay in full each month. Within a year, you'll have your own history to stand on.
Becoming an authorized user is a smart, low-cost way to jumpstart your credit, as long as the account is healthy and both people understand the arrangement. If you want help choosing the right first step for your situation, our advisors can walk you through it.
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