Will adding me as an authorized user help my credit?
Adding someone as an authorized user on a credit card can be a complex decision, especially when it comes to understanding how it can impact your credit score. While it may seem like a straightforward process, the answer to whether adding an authorized user will help your credit is not always clear-cut. Let’s delve into the factors that come into play and help you make an informed decision.
Understanding the concept of an authorized user
An authorized user is someone who has access to a credit card but is not the primary account holder. The primary account holder is responsible for the account and must be over the age of 18. When you add an authorized user to your credit card, the account’s credit history is reported to the credit bureaus, which can have an impact on both the primary account holder’s and the authorized user’s credit scores.
How adding an authorized user can help your credit
1. Building credit history: If you have no credit history or a limited one, becoming an authorized user on someone else’s account can help establish a credit history. As long as the primary account holder has a good payment history, your credit score may improve over time.
2. Length of credit history: The length of your credit history is a significant factor in your credit score. By becoming an authorized user, you may benefit from the primary account holder’s longer credit history, which can positively impact your score.
3. Credit utilization: If the primary account holder has a high credit limit and keeps a low balance, your credit utilization ratio will likely be better, which can improve your credit score. However, if the primary account holder has a high balance, it may negatively affect your credit utilization ratio.
4. Payment history: The primary account holder’s payment history will be reflected on your credit report. If they consistently pay their bills on time, it can positively impact your credit score.
How adding an authorized user can hurt your credit
1. Late payments: If the primary account holder fails to make payments on time, it can negatively affect your credit score, as late payments are reported to the credit bureaus.
2. High credit utilization: If the primary account holder has a high balance on the credit card, it can increase your credit utilization ratio, which may harm your credit score.
3. Account closure: If the primary account holder closes the credit card, your credit score may be affected, as the account’s age and history will no longer be reported.
Conclusion
Adding someone as an authorized user on a credit card can help your credit score in various ways, such as building credit history and improving your credit utilization ratio. However, it can also have negative consequences if the primary account holder has poor credit habits. Before making the decision, consider the primary account holder’s credit history and payment behavior. If you choose to become an authorized user, monitor your credit score regularly to ensure it is positively impacted.
