Quick Credit Tip: Become an Authorized User

Learning how to become an authorized user on a credit card is a strong and quick strategy for building your credit, and building it fast. In fact, I have seen people’s scores jump as much as sixty points just by becoming authorized users.

Before discussing the mechanism for becoming a an authorized user on a credit card, let us take a look at the definition of an authorized user. An authorized user is a person who has permission to use another person’s credit card. The credit-scoring bureaus treat an authorized user just like they treat the account holder. If the account is delinquent, the authorized user’s credit score will suffer. If the account is in good standing, the authorized user’s credit score should improve.

For this reason, people with bad credit scores can become an authorized user as a strategy for building their credit scores.

To go about this properly, you will need to do several things. First and foremost, choose a family member (preferably a relative who lives with you) with good credit. The credit-scoring bureaus only include authorized users who are related to the account holder. If you have the same address and same last name as the account holder, the credit-scoring bureaus will be more likely to consider your authorized user status as valid.

Next, make sure the credit card company reports authorized users to the credit bureaus. You can simply call the credit card company and say: “I want to become an authorized user. Will you report my status as an authorized user to the credit bureaus?”

If the creditor does not report authorized users, this strategy will not help repair your credit score, so you should find a different credit card to which you can be added as an authorized user.

This brings me to my next point. In trying to implement what you have learned about how to become an authorized user, you might find that your family members are hesitant to add your name to their accounts, especially if you have a history of bankruptcy, repossession, or other financial disasters. What if you buy a bunch of things using the credit card that you cannot afford? The account holder will then be forced to either pay the bill or harm his own credit score. (And your relationship with the account holder might also be harmed.)

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Here are some strategies so that the account holder can protect himself or herself:

1. First, the account holder should tell the credit card company not to issue a card to you. If you do not have a physical credit card, you will have a very hard time making purchases!
2. The account holder should not disclose the account number, credit card expiration date, and card security code from you.

In other words, you will be added in name only, without the ability to use the credit card. You can borrow the account holder’s positive credit history, but you will not be able to tarnish the account’s standing.

Keep in mind that account holders will not be affected by your behavior on any accounts that are separate. So long as the account holder does not allow you to access the authorized user account, his credit score will not suffer.

But yours will surge, so long as the account holder keeps the balance low (preferably below 30 percent of the limit) and continues making on-time payments. In fact, you might be shocked at how quickly your score starts to improve. After all, learning how to become an authorized user is among the most powerful tricks for repairing your credit.

Philip Tirone is a credit-scoring expert and author of 7 Steps to a 720 Credit Score.

This guest post was submitted by Philip Tirone, a credit expert who teaches people how to build credit and avoid pitfalls.

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