When you're just starting to build your credit history, it can be challenging to get approved for a loan or credit card on your own. Being an authorized user on a loved one's credit card can be an excellent way to begin building credit because it essentially allows you to piggyback on their good credit habits.
What Is an Authorized User?
Becoming an authorized user on a credit card account means you'll have a card of your own that's tied to the primary cardholder's account, and you can use that card to make purchases. You can typically get access to make payments on the account, or pay the account owner directly for your purchases, but you're not legally responsible for any of the debt incurred, even if you generated it.
When you get added as an authorized user on an account, the credit card company typically reports the account to the credit reporting agencies, which add it to your credit reports. The tradeline—which is what credit reporting agencies call the accounts listed on your reports—includes the current balance and payment status, as well as the account's payment history.
So if your loved one has managed the account well, including making payments on time and keeping the balance relatively low compared with the credit limit, being an authorized user can have a significant positive impact on your credit score.
How to Ask Someone to Add You to Their Account
Being an authorized user has some clear benefits for people who are just starting to build credit. But when it comes to family and money, things can get tricky. Here are some tips to help you start the conversation:
- Ask someone who is responsible with money. It's important to only ask someone who has a history of paying their bill on time and keeping their balance low because these are the most influential factors in your FICO® Score☉ . If you get added to an account that has a high balance or missed payments, it may not wind up helping your credit.
- Offer assurances. Even if you're not legally responsible for paying for any charges you make, it's important to assure your loved one that you will. Alternatively, you could agree not to make any charges to the account at all. Either way, your credit will benefit as long as the account holder manages the account responsibly.
- Explain how it will help you. Help your loved one understand how adding you as an authorized user can give you an advantage as you start building credit. You may even consider sharing some other actions you plan to take to build credit so they know you won't rely solely on them.
Becoming an authorized user is an excellent first step on your credit journey, and it can open up possibilities to help you reach your future financial goals. As you succeed in getting added as an authorized user on a loved one's credit card account, monitor your credit regularly with Experian's free service to keep track of your progress and see how your authorized user status and other steps you take are helping you achieve your credit goals.