Does getting added as an authorized user help credit? This is a common question among individuals looking to improve their credit scores. The answer to this question is not straightforward, as it depends on various factors. However, understanding the impact of becoming an authorized user on your credit can help you make informed decisions about your financial future. In this article, we will explore how being added as an authorized user can affect your credit, and provide tips on maximizing its benefits.
The primary benefit of becoming an authorized user is the potential to improve your credit score. When you are added as an authorized user on someone else’s credit card account, you gain access to the account’s payment history, credit utilization, and account age. These factors play a significant role in determining your credit score.
Payment history is a crucial component of your credit score, accounting for 35% of your FICO score. If the primary account holder has a history of making timely payments, this positive payment behavior can be reflected on your credit report. As an authorized user, you may see an improvement in your credit score if the primary account holder has a good payment history.
Credit utilization, which makes up 30% of your FICO score, is another area where being an authorized user can help. If the primary account holder has a low credit utilization ratio, meaning they use a small percentage of their available credit, this can positively impact your credit score. As an authorized user, you’ll benefit from this low utilization ratio if it’s reflected on your credit report.
Account age is also a factor in your credit score, accounting for 15%. The longer an account has been open, the better it is for your credit score. When you’re added as an authorized user, you inherit the account’s age, which can help boost your credit score over time.
However, it’s important to note that not all credit cards report authorized user activity to the credit bureaus. Before becoming an authorized user, make sure the primary account holder’s credit card issuer reports authorized user activity to the three major credit bureaus: Equifax, Experian, and TransUnion. If the card does not report authorized user activity, becoming an authorized user will not help your credit score.
Here are some tips to maximize the benefits of being an authorized user:
1. Choose a primary account holder with a good credit history and responsible spending habits.
2. Monitor your credit score regularly to track any improvements.
3. Avoid making purchases on the account you’re an authorized user for, as this could negatively impact the primary account holder’s credit score.
4. Consider adding an authorized user to your own credit card account to help your loved ones improve their credit scores.
In conclusion, getting added as an authorized user can help credit if the primary account holder has a good payment history, low credit utilization, and a long account age. However, it’s crucial to choose the right credit card and monitor your credit score to ensure you’re reaping the benefits.
