Does Authorized User Affect Credit Score?

How Does Having an Authorized User Impact Your Credit?

Whenever you are included in the list of authorized users of someone’s credit card, then it affects your score. An authorized user is a person who has the right to make certain charges on the credit card account of another person. It also means that authorized users are not legally liable to pay back the debt – the main cardholder is solely responsible for it. However, the status of an authorized user provides for using the available credit limit of the card and developing your credit history due to the reporting of the account activity to the credit bureaus.

The Impact of an AU Status on Credit Scores

Authorized user accounts are considered when credit scoring systems generate credit ratings for creditworthy people. If you are an authorized user, your credit report receives all the payment information on the account coupled with good or bad comments. Your score will therefore rise if the main cardholder has a clean record of timely credit card payment. On the other side, your credit score may suffer should you skip payments or exceed the credit limit you specified.

Generally, particularly if you have minimal previous credit experience, being an authorized user on an account with a strong payment record for as long as feasible would help your credit most of all. One of the methods used in the credit-establishing process for minors, young adults, or a wife/husband unable to qualify for credit in their own right is becoming an authorized user.

It is important to note, nonetheless, that the impact of authorized user status on your score has lessened recently. This is so because credit rating systems include the reality that AU does not incur any financial risk and is more complex. Thus, it is crucial to underline that while it could still have some beneficial impact, this is not nearly as strong as it was.

Balancing the Advantages and Disadvantages of Becoming an Authorized User

Being added as an authorized user can offer several potential benefits, especially if you have little or no credit history.

• New credit – When you get added to an account, that entire account payment history appears on your report contributing to the length of credit history.
• Credit mix – If you only had credit cards before and you have been added to an installment loan such as an auto loan, it increases the type of credit.
• More credit available to you – The total credit limit on the account that you are added is useful in reducing your total credit utilization.

However, there are some downsides to consider as well before becoming an authorized user.

• Negative marks – In addition to that, if there were late payments, high balances, or any other negatives on the account, then the credit record also suffers.
• Harms due to account closure – If the primary cardholder closes the account, credit credit-building factor for the future is closed for you.
• Fraud – While not very common, you may be held responsible for fraudulent charges by an authorized user.
• If you do not open the account, you cannot control it; thus, it has no direct financial management from your end.

Guidelines on Authorized User Account

If you decide becoming an authorized user would benefit your credit situation, here are some tips to minimize risks.

• Questions first - Get the full payment history and the current state before agreeing to accept User status.
• Review statements - Even if you are not legally responsible for the accounts, check the statements for signs of fraud regularly.
• Restrict your spending – If possible, talk to the primary cardholder and request him or her to set some limits on your spending.
• Pay your bills - Ensure that you chip in with your part of the monthly charges in order not to jeopardize the account of the primary holder.
• Re-establish credit – Create new accounts in your name and maintain them properly and on time.
• Take yourself out after credit history is proven – Having a good credit history in your name you do not necessarily have to be an authorized user anymore.

The Impact Over Time

On average, getting added as an authorized user is most helpful when a user has little or no credit history at all. The longer one can remain on an account and have a good payment history, the better one can assist in developing the scores. In a year or so, you may wish to apply for credit cards in your capacity instead of merely being an authorized user and prove credit-worthy by making the necessary payments on time.

Even though it has certain risks, an authorized user status is one of the simplest and fastest ways to establish the credit history on someone else’s account. As long as you approach it prudently, especially by assessing the account condition and limiting its usage it is possible that being an authorized user will have positive impacts on your credit in the short term. Just remember to also open your accounts and verify that you have a positive credit history under your name in the future.

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