Can becoming an authorized user help credit?
Becoming an authorized user on someone else’s credit card can be a powerful tool for building or improving your credit score. While it’s not a guaranteed solution, it can certainly have a positive impact on your creditworthiness. In this article, we’ll explore how becoming an authorized user can help credit and the potential benefits and risks involved.
How Does Being an Authorized User Affect Credit?
When you become an authorized user on someone’s credit card, you have access to the card but are not responsible for the payments. However, the card’s activity will still appear on your credit report, which can have several positive effects on your credit score:
- Positive Payment History: If the primary cardholder maintains a good payment history, your credit report will reflect this. Timely payments can significantly improve your credit score.
- Length of Credit History: The longer your credit history, the better. As an authorized user, you’ll benefit from the primary cardholder’s established credit history, which can contribute to a longer credit history for you.
- Credit Utilization Ratio: If the primary cardholder keeps their credit utilization low, it can positively influence your credit utilization ratio. A lower credit utilization ratio can boost your credit score.
Benefits of Becoming an Authorized User
There are several benefits to becoming an authorized user:
- Building Credit: If you have limited or no credit history, becoming an authorized user can help you establish a credit profile.
- Improving Credit Score: As mentioned earlier, positive payment history, a longer credit history, and a lower credit utilization ratio can all contribute to a higher credit score.
- Learning Responsible Credit Behavior: Observing the primary cardholder’s credit habits can help you learn how to manage credit responsibly.
Risks and Considerations
While there are benefits to becoming an authorized user, it’s important to be aware of the potential risks:
- Joint Responsibility: If the primary cardholder fails to make payments, you may be held responsible for the debt, even though you don’t have control over the card.
- Impact on Credit Score: If the primary cardholder has a poor credit history, it could negatively affect your credit score.
- Lack of Control: As an authorized user, you have limited control over the card and its usage, which can lead to unexpected charges.
Conclusion
Can becoming an authorized user help credit? The answer is yes, but it’s essential to choose the right primary cardholder and be aware of the potential risks. By carefully considering the benefits and drawbacks, you can make an informed decision that can help you build or improve your credit score.
