Can you build credit history as an authorized user? This is a question that often arises among individuals who are looking to establish or improve their credit scores. Being an authorized user on someone else’s credit card can be a powerful tool in building a positive credit history. In this article, we will explore how being an authorized user can impact your credit and provide tips on how to make the most of this opportunity.
Building credit history as an authorized user is possible through the use of someone else’s credit card. When you are added as an authorized user to a credit card account, you gain access to the account holder’s credit line and credit history. This means that any positive activity on the account, such as timely payments and responsible use of the credit limit, will be reflected on your credit report.
How does being an authorized user help build credit history?
1. Positive Payment History: If the account holder makes timely payments, this will positively impact your credit history. Payment history is a significant factor in determining your credit score, so having a history of on-time payments can help improve your score.
2. Credit Utilization: The authorized user’s credit utilization is calculated based on the total credit available to them. If the account holder maintains a low credit utilization ratio, this can benefit the authorized user as well. Keeping the credit utilization below 30% of the available credit is generally considered good practice.
3. Length of Credit History: By being an authorized user, you can benefit from the account holder’s long-standing credit history. The longer your credit history, the better it is for your credit score.
4. Account Mix: Adding a revolving credit account, such as a credit card, to your credit mix can also help in building a diverse credit profile, which can positively impact your credit score.
How to make the most of being an authorized user:
1. Choose a Responsible Account Holder: It is crucial to select someone who is responsible with their credit and has a good credit history. This ensures that your credit score benefits from their positive behavior.
2. Monitor Your Credit Report: Regularly check your credit report to ensure that the authorized user’s positive activity is accurately reflected on your credit history.
3. Use the Card Responsibly: Even though you are an authorized user, it is important to use the credit card responsibly. Make small purchases and pay them off in full each month to avoid unnecessary debt.
4. Request to Be an Authorized User: If you are not already an authorized user, request to be added to someone’s credit card account. Make sure to discuss the terms and conditions with the account holder before making a decision.
In conclusion, being an authorized user can be a valuable way to build credit history. By choosing the right account holder, using the card responsibly, and monitoring your credit report, you can take advantage of this opportunity to improve your credit score.
