Does being an authorized user help your credit score?
Being an authorized user can significantly impact your credit score, though the extent of this impact varies depending on various factors. When you are added as an authorized user on someone else’s credit card, you gain access to their credit account, and your credit score can be affected in several ways.
Positive Impact on Credit Score
One of the primary benefits of being an authorized user is the potential to improve your credit score. Here’s how:
1. Credit Utilization Ratio: As an authorized user, you benefit from the primary cardholder’s credit utilization ratio. This ratio is a critical factor in determining your credit score. If the primary cardholder maintains a low credit utilization ratio, it can positively influence your score.
2. Payment History: Your credit score reflects your payment history. If the primary cardholder consistently pays their credit card bills on time, this positive behavior can be reflected in your credit score as well.
3. Credit Mix: Having a mix of credit types, such as credit cards, loans, and mortgages, can boost your credit score. As an authorized user, you gain access to the primary cardholder’s credit card, which can contribute to a diverse credit mix.
4. Length of Credit History: The longer your credit history, the better it is for your credit score. Being an authorized user allows you to benefit from the primary cardholder’s long-standing credit history.
Factors to Consider
While being an authorized user can help your credit score, it’s important to consider the following factors:
1. Primary Cardholder’s Credit Behavior: The primary cardholder’s credit behavior significantly impacts your score. If they have a poor payment history or high credit utilization, it can negatively affect your score.
2. Account Age: The age of the credit card account matters. Older accounts tend to have a more significant impact on your credit score.
3. Limited Control: As an authorized user, you have limited control over the primary cardholder’s spending or payment behavior. Therefore, it’s crucial to choose someone with responsible credit habits.
Conclusion
In conclusion, being an authorized user can help your credit score by positively influencing your credit utilization ratio, payment history, credit mix, and length of credit history. However, the impact depends on the primary cardholder’s credit behavior and the age of the credit account. If you choose wisely and maintain a positive relationship with the primary cardholder, being an authorized user can be a valuable tool in improving your credit score.
