I teach my students and Credit Counsel Elite mastermind members that one of the fastest ways to boost your credit score is through Authorized Users. I’ll explain what an Authorized User is and how being one can quickly raise your scores.
Becoming an Authorized User (AU) means that you are added to another person’s credit card account, and you will have that new “tradeline” on your credit report. If you have the card, then you can use it to make purchases. The account will be added to your credit report, and if the cardholder has a good history and credit management, showing low utilization, then your score should be boosted by the next statement closing date for that card. This is especially true for those with a sub-par or nonexistent history. A card will be issued in your name, but you have no legal responsibility to make the payments. If you are becoming an Authorized User or providing an Authorized User spot to someone else, make sure you understand the expectations and risks. I never recommend allowing the AU person to be given the new credit card, to begin with, which lowers the risk involved by sending the new AU card to the main account holder's address.
Authorized Users can be added to a card by the primary cardholder. Almost every card has AU spots available, with many in the 5-10 position ranges. Some premium cards may have a fee (usually $75 or more) to add an AU. Anyone (child, spouse, close friend) can be an AU if they meet the issuer’s age requirements. The AU can make purchases with their card (if they have the card, know the number, or somehow order a replacement card) and are not liable for paying. The account holder is responsible for paying the AU’s purchases and will be expected to pay monthly as if they had made the purchases themselves.
If you provide an AU spot to someone (in the industry, we typically refer to the account holder as the “seller” and the AU person as the “buyer”), you don’t have to give that person the new AU card. Sometimes you will need to activate the card and make a purchase on the card (yourself) to ensure that the AU will have the information generated in the system to properly report to the credit bureaus, but in many cases, this is not necessary. You have full control, and the AU will gain the benefit of your good credit history.
The already-established credit card account will be reflected on your credit report. This is the fastest way to build a robust credit history. If you have no credit history and you become an AU of a card that has ten years of payment history, you will have a score immediately within the next 30 days max, and it will usually be in the “fair” to “good” range. I have had clients who started with a single credit card and paid it on time for six months with very low utilization; after the six months, their score finally reached 738. If they used an AU spot, they could reach this score much sooner.
An AU spot can be positive on four of the six credit categories that we focus on as well as the negative impact if the main card holders account shows anything opposite of spectacular on the report:
Credit Card Utilization
Age of Credit History
These four categories make up about 90% of your credit score.
Your own credit history will be a factor as to how much your credit score is affected by being an Authorized User. If you are new to credit or have no credit history, being an authorized user could have a more significant positive impact than someone with a damaged credit profile.
PRO TIP: The longer the history of the card, the more of an impact it can make. So if possible, look to grandma and grandpa for cards with decades of history.
To become an authorized user, you must find a trusted family member, friend, or associate to add you to their account. The main account holder will need the AU’s full name, date of birth, and social security number to make sure the card reports to the credit bureau properly. In many cases, you’ll also be asked for the AU’s address and phone number, where I recommend putting your own information to ensure the new card will only be received by you. In many cases, adding a new AU will take less than 5 minutes on the bank's website, app, or by calling in. As the AU, you must ensure the account owner has and will pay their credit card bill on time every month, and, if possible, their whole balance before the closing date; this will lower their utilization. Utilization below 9% is best; using 30% or more of a card’s credit limit could impact your credit score negatively. Before adding anyone as an AU, contact the card issuer and make sure that they report AUs to the credit bureaus; some banks/cards do not, and being an AU on these cards will not be of benefit.
Only become an AU on a beneficial account with great age, payment history, and low usage. If you are added to a newer card, with high utilization, bad payment history, or any mix of (this would be the wrong card to be added to), it will negatively affect your credit. If that ever did happen, please know you can call the 3 bureaus to get it removed from your reports. Negative information will impact your score differently for each bureau. For example, if the primary cardholder misses payments, Experian does not include this information on an authorized user’s credit report, but other bureaus will, and high credit utilization could wind up damaging the authorized user’s credit. Also, primary account holders please verify with potential AU that there isn’t any bad bank account relationship they might have with this particular bank (like a charge-off, collection, or closed accounts with negative status), as this could potentially close the main holder's credit card account as a whole.
My Team at Credit Counsel Elite can find buyers for your seasoned AU spots (9+ years with low utilization) or help you find others willing to add you as an Authorized User to their cards.
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