Becoming an authorized user on someone else's credit card account is a strategy for improving credit quickly. It works best if the primary user's card has a long record of on-time payments and a high credit limit and the authorized user doesn't have recent blemishes on their credit report.
What Does Adding an Authorized User to a Credit Card Do? When a primary cardholder adds an authorized user to a card, that account will appear on the user's credit report and can help that person build or restore credit if the account is managed well.
For instance, for those with bad credit (a credit score below 550), becoming an authorized user improved their credit score by 10% — in just 30 days. Fast forward to 12 months, and that figure jumps to 30%.
You could help them build their credit. Assuming you maintain good credit card habits (on-time payments, low debt-to-income ratio, etc.) — and assuming the card issuer reports authorized-user activity to the credit bureaus — that will be reflected on your partner's credit report and help them build good credit.
Authorized user accounts must show up on your credit report to affect your credit score. As for how long it takes for authorized user to show on credit report, you might see your score change as soon as the lender starts reporting that information to the credit bureaus, which can take as little as 30 days.
Make sure your card issuer reports authorized users to the credit bureaus. The credit-building effect works even if you don't give the authorized user a card to carry and use. Your good credit habits — keeping balances low and paying on time — build the credit history of you and your partner.
Many issuers allow the primary account holder to add a secondary account holder to a credit card. This person is known as an authorized user and can use the credit card as if it were their own. They are “authorized” to make purchases with the credit card. However, they have no legal responsibility toward the debt.
An account that you are piggybacking on became delinquent.
Sometimes being an authorized user on a credit card or having a joint account can be a risky thing. You are relying on the other person to pay their bills on time and to manage their balances well, otherwise, their behavior can compromise your credit.
Yes, adding an additional cardholder can affect the primary cardholder's credit, especially if the secondary cardholder overspends or if the primary cardholder is unable to make timely repayments.
If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended. This combination may help you improve your credit mix. Lenders and creditors like to see a wide variety of credit types on your credit report.
Generally speaking, scores between 690 to 719 are considered good in the commonly used 300-850 credit score range. Scores 720 and above are considered excellent, while scores 630 to 689 are considered fair. Scores below 630 fall into the bad credit range.
What types of subscriptions help build credit. Subscriptions that may help build your credit include streaming services (think Netflix® and Hulu®) and other recurring payments to applications on your phone (think Headspace® or Spotify®).
A short credit history gives less to base a judgment on about how you manage your credit, and can cause your credit score to be lower. A combination of these and other issues can add up to high credit risk and poor credit scores even when all of your payments have been on time.
Similarly, if you pay off a credit card debt and close the account entirely, your scores could drop. This is because your total available credit is lowered when you close a line of credit, which could result in a higher credit utilization ratio.
Why credit scores can drop after paying off a loan. Credit scores are calculated using a specific formula and indicate how likely you are to pay back a loan on time. But while paying off debt is a good thing, it may lower your credit score if it changes your credit mix, credit utilization or average account age.
Sharing a credit card can help the partner with the lower credit score start to build their credit and raise their score. There are two options for sharing a card, Kuderna explains. You can open a joint card or have the spouse with the lower credit score become an authorized user on the other's credit card.
How Long Does It Take for an Authorized User To Show Up on a Credit Report? If this information is reported, it will typically show up on your credit report in around 30 days. However, some lenders do not report authorized users to credit bureaus, in which case the authorized user may not appear at all.
The primary cardholder has to add an authorized user. This can be done by calling the credit card issuer or logging onto the online account. Many issuers will issue a second card for the authorized user, but it will generally be mailed to the primary cardholder, who can choose to give it to the authorized user or not.
So, if you have a mix of credit cards and major loans, like a mortgage or auto loan, your credit score would be higher. However, if these loans are in your spouse's name only, and if they have a positive payment history, your spouse could have a higher credit score than you.
American Express authorized users can be denied if they are younger than 13 years old or if they have a bad history with Amex, such as past defaults or lawsuits with the company.
Credit scores are calculated on a specific individual's credit history. If your spouse has a bad credit score, it will not affect your credit score. However, when you apply for loans together, like mortgages, lenders will look at both your scores. If one of you has a poor credit score, it counts against you both.
VantageScore and FICO are the two main credit-scoring models. For both the VantageScore and base FICO® score models, the lowest score is 300 and the highest credit score is 850. But even if you have pretty good credit habits, don't be surprised if you check your scores and find that you're below 850.