Have you ever wondered how some people achieve perfect credit scores while you’re still working on yours? The answer might be simpler than you think: the authorized user strategy.
Being added to someone else’s credit card can help your score rise without any spending. But is it really that easy? With tools like Blitz, managing your credit and finances becomes a breeze.
Blitz is your money assistant powered by AI. It assists you in monitoring spending and credit in one place, providing you with the information to make informed decisions.
Ready to improve your credit? Keep reading to find out if becoming an authorized user can transform your score!
How Being an Authorized User Can Help Your Credit
If you don’t want to manage a credit card yourself but would like to improve your credit score, becoming an authorized user is an option. Let’s see how the practice increases your credit, particularly if you’re a beginner.
Boosting Your Credit Score by Piggybacking on Someone Else’s History
Once you’re added as an authorized user, the main cardholder’s credit history ties into yours. If they make payments on time, their positive actions boost your credit score. This gives you a lift without requiring much effort.
Quick Credit Boost for Those with Thin or No Credit History
For students or anyone with little credit, becoming an authorized user is a quick way to build a credit history. You gain the benefit of an established account without the risk, helping you improve your score easily.
Benefits for New Credit Seekers
If you plan to apply for your own credit card or loan, being an authorized user helps you create a stronger credit profile. A good credit history improves your chances when applying for financial products.
When an Authorized User Strategy Can Hurt Your Credit
When someone adds you as an authorized user, their credit history gets linked to yours. In case they pay on time every month, their good habits can bring up their credit score. This raises your score without doing much work. Here’s how it can go wrong.
Inheriting Bad Credit Habits and Debt
If the main cardholder has poor credit habits—like late payments or high spending—those issues can affect you too. As an authorized user, you take on their credit history. Their bad habits can lower your score instead of helping it.
The Risk of Not Understanding Credit Reporting
Credit reporting can be confusing. Not all credit cards report authorized users the same way. Some might not report your status at all. If you don’t know how your status is reported, it could hurt your credit instead of helping it.
The Short-Term Benefit
The credit boost from being an authorized user may not last. If you rely only on this strategy without building your own credit, your score could drop when the primary cardholder’s account is no longer reported. Long-term credit growth needs more than just being an authorized user.
Read: Credit Building Loans: Are They Worth It for Students?
Who Should Consider Using the Authorized User Strategy?
Not everyone should use the authorized user strategy. However, it can be a game-changer for certain people. Here’s who can benefit the most.
Students with Limited Credit History
As a student, your credit options may feel tight, especially if you haven’t opened a credit card. The authorized user strategy helps here. It lets you tap into a credit history you wouldn’t have otherwise. Here’s how it works:
- Gains Credit Early: As an authorized user, you can begin establishing credit, even if you don’t have your own card.
- No Spending Required: You don’t have to spend any money or pay anything to enjoy the reward.
- Sets You Up for Future Credit: Good credit is important for future requirements, such as car loans or apartment rentals. It speeds you on your way.
For students who are not yet qualified for a credit card, this is a simple method of establishing credit.
Young Adults Looking to Build Credit Quickly
If you’re a young adult with minimal credit history, being an authorized user can help your credit score. Rather than having to wait for years, you can take advantage of someone else’s positive credit behaviors.
- Quick Credit Boost: When you want to get your credit score up quickly for a car loan or renting an apartment, this will do the trick.
- No Need for Personal Credit: You don’t need to create your own credit card immediately to get your score better.
- Long-Term Credit Building: This strategy is great for building a solid credit foundation for your future.
Being added as an authorized user is a smart choice for young adults who want a quick credit boost.
Those With Family Members or Partners with Excellent Credit
If you have a family member or partner with excellent credit, this strategy could benefit you. By becoming an authorized user on their card, you gain from their strong credit history.
- Tap into Established Credit: Joining someone with a high credit score lets you benefit from their good habits.
- Boost Your Credit Score: A positive history from the primary cardholder can help improve your score with little effort.
This strategy is a wonderful way for individuals with a family or spouse who has great credit to also raise their own scores in a short time.
How to Protect Yourself When Becoming an Authorized User
While being an authorized user may be a great option to enhance your credit, you must safeguard your interests. To monitor and secure your financial future, employ these guidelines.
Establish Clear Communication with the Primary Cardholder
Before you are an authorized user, speak with the main cardholder. You should discuss the usage of the card, the payment schedule, and who should be the manager of the account. This helps avoid misunderstandings and keeps both parties on the same page.
Monitor Your Credit Regularly
Regularly check your credit to see how being an authorized user affects it. Utilize apps such as Credit Karma or Blitz to track changes to your credit report and ensure that the account works in your favor.
Avoid Using the Card Excessively
While being an authorized user is one of the best ways to increase your credit score, in case the card is excessively used, it is going to hurt it. Even if you are not fully accountable for the balance, you should keep your spending responsible so as to safeguard your score.
Alternatives to the Authorized User Strategy
If becoming an authorized user isn’t right for you, other ways can build your credit. Here are some effective alternatives.
Secured Credit Cards for Students and Young Adults
A secured credit card is a good option for students or young adults who decide to improve their credit level without help from third parties. You are required to put up a deposit that will determine your credit limit, and your score will gradually improve through responsible use.
Credit Builder Loans
Another alternative is credit builder loans. You borrow a small amount and pay it off over time. Your on-time payments are reported to the credit bureaus and establish a good credit record.
Becoming an Authorized User on a Card You Manage
In case you have your own credit card, it is possible for you to become an authorized user on it. Thus, you still get the authorized user method to amplify your credit while retaining full control of your card.
With the help of these alternatives, you can find the option that fits your financial goals and needs the most.
FAQs on Authorized User Strategy
Can an authorized user build credit without using the card?
Yes! When you’re an authorized user, your credit score can increase simply from being placed on a good history account—even if you don’t use the card.
How long does it take for an authorized user to see an improvement in their score?
It can take a few weeks to up to two or three months. Credit score updates reflect as soon as the credit card issuer reports the activity to the credit bureaus.
Is being an authorized user the same as being a joint account holder?
Not at all, an authorized user is permitted to use the card, but the user is not liable for the debt. A joint account holder is someone who is equally responsible for the card balance and payments.
What happens if the primary cardholder misses a payment while I’m an authorized user?
In case the primary cardholder misses a payment, it may result in a bad credit report for you as well. Therefore, relying on the primary cardholder and hence being kept in the loop of the payment schedule is very important.
Can I remove myself from a credit card as an authorized user anytime?
Yes, you can be removed at any time. Just call the credit card company or have the primary cardholder remove you from the account, but consider how it might impact your credit score.
Conclusion: Pros and Cons of Becoming an Authorized User
If you are a credit beginner, being an authorized user is a quick and effective method to increase your credit score. However, weigh the positives and the risks before making a call.
Blitz is your go-to college money helper. It takes charge of fast cash and job listings and assists in monitoring your credit score. With Blitz, you’re at the helm of your finances, whether balancing credit or making smart money decisions.
Take charge of your credit now with Blitz. Make your financial journey smoother and more informed.
