Does being an authorized user help my credit score?
Being an authorized user can indeed have a positive impact on your credit score. As an authorized user, you gain access to someone else’s credit card account without being the primary account holder. This arrangement can be beneficial for several reasons, particularly when it comes to building or improving your creditworthiness. Let’s explore how being an authorized user can help your credit score.
1. Credit Utilization Ratio
One of the most significant factors affecting your credit score is your credit utilization ratio, which is the percentage of your available credit that you’re currently using. As an authorized user, you can benefit from the credit limit of the primary account holder. This can lower your credit utilization ratio, assuming you don’t use the card, which in turn can positively affect your credit score.
2. Payment History
Payment history is another crucial factor in determining your credit score. When you’re an authorized user, you get to see the payment history of the primary account holder. If they have a good track record of paying their bills on time, this can reflect positively on your credit report. Over time, this can help improve your credit score.
3. Length of Credit History
The length of your credit history also plays a role in your credit score. As an authorized user, you gain access to the primary account holder’s credit history, which can help extend your overall credit history. A longer credit history can contribute to a higher credit score.
4. Credit Mix
Credit mix refers to the types of credit accounts you have, such as credit cards, mortgages, and auto loans. Being an authorized user allows you to diversify your credit mix, as you now have a credit card account in your name. This can positively impact your credit score, as lenders view a diverse credit mix as a sign of responsible credit management.
5. Credit Inquiries
When you’re added as an authorized user, the primary account holder’s credit report will show an inquiry for adding you as an authorized user. This type of inquiry is considered a “soft pull” and doesn’t affect your credit score. However, it’s important to note that frequent hard inquiries, which occur when you apply for new credit, can negatively impact your score.
Conclusion
In conclusion, being an authorized user can help your credit score in several ways, including improving your credit utilization ratio, payment history, length of credit history, and credit mix. However, it’s essential to understand that being an authorized user doesn’t guarantee a higher credit score, as it depends on the primary account holder’s credit habits and the overall credit situation. If you’re considering becoming an authorized user, make sure to choose someone with a good credit history and responsible spending habits.
