Personal Finance

Building Credit: Become an Authorized User on a Credit Card

| by PhilipTirone

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 credit card authorized user, let’s 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 learn how to become an authorized user on a credit card as a strategy for building their credit scores and their credit card 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.

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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 know how to become an authorized user on a credit card and whether you report authorized users to the credit bureaus.”

If the credit scoring bureaus does not report authorized users, this strategy will not help you 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 on a credit card, 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 disaster. 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.)

In my book 7 Steps to a 720 Credit Score (Philip Tirone, 2008), I describe the process for persuading someone to add your name so that you can become an authorized user on a credit card. In short, the account holder can protect himself by:

  1. Telling the credit card company not to issue a card to you.
  2. Withholding 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 on the credit card) and continues his history of on-time credit card payments. In fact, you might be shocked at how quickly your score starts to improve. Learning how to become an authorized user on a credit card is among the most powerful tricks for repairing your credit.