Becoming an authorized user can do wonders for your credit report but it can also do some harm if you’re not careful. Here’s a run down on how becoming an authorized user can affect your credit score.
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How does becoming an authorized user affect your credit score?
Getting added as an authorized user can boost your score in some cases but it can also hurt your score if not done properly.
Keep reading below to find out everything you need to know about getting added as an authorized user.
FICO determines your credit score in the following ways:
- Payment History (35%)
- Utilization (30%)
- Credit History (15%)
- New Credit (10%)
- Mixed Credit (10%)
Thus, becoming an authorized user can improve your credit score by doing these things:
- 1) Lowering your credit card utilization
- 2) Improving payment history
- 3) Increasing the average age of accounts
- 4) Diversifying your credit (this factor plays a very limited role).
1) Lowering your credit card utilization
In my opinion, the best (and quickest) way to boost your credit score with an authorized user is to lower your credit card utilization.
Your credit card utilization is how much of your current credit line you are using. So by getting added to a card with a low utilization, you can bring down your own utilization and boost your score.
2) Improving payment history
Another great way to improve your credit score with an authorized user is to boost your payment history. Payment history is the number one factor (35%) for your FICO credit score so it is extremely important.
This can be especially helpful because some banks, such as Capital One, will backdate the open date to the date the original account was opened.
This means that if the primary cardmember had 10 years of solid payment history, you can benefit from that by getting added to their account.
3) Increasing the average age of accounts
Your credit history is only 15% of your credit score but you can give it a nice boost by getting added to an old credit card that back dates. Look to banks that are known to backdate like Bank of America, Capital One, Chase, and US Bank.
4) Diversifying your credit
Still, if you only have installment loans which are loans like student loans, car loans, etc., then getting added to a credit card could be a fantastic way to diversify your credit mix.
Maximizing the effect of an authorized user account
To maximize the benefits of being added as an authorized user, your goal should be to get added as an authorized user to an account that:
- 1) Has as close to 0% utilization as possible
- 2) Has flawless payment history and no negative reports
- 3) Is older than your average age of accounts.
1) Has as close to 0% utilization as possible
The ideal credit card utilization is above 0% but still very low, likely around 5% or so. But as long as you can keep your utilization between 10 to 20%, you are probably doing okay.
If utilization is the major factor holding you back then you can expect to see a pretty substantial bump by getting added to someone who has a very low utilization.
2) Has flawless payment history and no negative reports
As talked about below, sometimes negative marks from the primary account holder will damage your credit score.
So when seeking out someone to add you as an authorized user you need to make sure that they have a squeaky clean payment history and that they will continue to make on-time payments.
3) Is older than your average age of accounts
If you have a very thin credit profile meaning that you don’t have a lot of accounts and they are very young then you want to find an account that has been around for a long time.
And remember, you also want to make sure that that bank will report and backdate the authorized user account. Otherwise, your average age of accounts will not benefit.
Weighing the factors
While the three factors above can help guide your decisions, you always need to keep in mind what factors matter the most for your credit score.
For example, if utilization is your sole problem and you can knock it down significantly by getting added as an authorized user, then that should take precedent over your average age of accounts.
For example, let’s say you have one maxed-out credit card with a $1,500 credit limit and that credit card is 5 years old. So your overall utilization is 99% and your average age of accounts is 5 years.
Now, let’s say you could be added to someone’s card with a $10,000 credit limit but the card is only sixth months old.
This will bring down the average age of accounts for you to around 2.5 years but it will knock your utilization down to 13%.
Since utilization carries way more weight in determining your credit score than your average age of accounts, it would make sense to jump on as an authorized user.
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How much can your score benefit?
How much your credit score can increase all depends on various factors that are at play, so it’s impossible to predict in any specific way.
Generally speaking, however, if you have a very thin profile, then bringing down your utilization and increasing your average age of accounts can have a substantial effect on your credit.
Anywhere from a 20 to 50 point increase is certainly obtainable, although YMMV.
Just don’t expect too much benefit.
The credit bureaus employ formulas to minimize the benefit to those who are solely trying to bolster their score with these tactics called “piggy backing.”
This means that you probably will start to hit a point of diminishing returns after being added as an authorized user to several credit cards.
And if it looks like you are engaging and suspicious activity to boost your score, that is certainly not going to help.
Make sure the new account is reported
Not all banks require you to provide a social security number when adding someone as an authorized user but it all depends.
American Express will usually ask for a social security number at some point while banks like Chase don’t.
If the person adding you is associated with you (e.g., you share the same address), then there may be a better chance for the banks to report it to the authorized user’s credit report but you should always follow up to ensure that it gets reported.
Authorized users and hard pulls
I’m not aware of any bank that conducts a hard pull on your credit when being added as an authorized user.
And it really wouldn’t make sense for them to do it — after all, you’re not liable for the payments in anyway so you couldn’t really pose a true risk to banks.
Although, if you ran up a crazy high balance I guess you could indirectly pose a threat to them but that’s another story.
Negative marks on the primary cardholder’s account
According to Credit Karma:
The VantageScore 3.0 model only includes positive information from authorized user accounts. On the other hand, the FICO model includes positive and negative marks from legitimate authorized user accounts…
There may even be differences based on the credit bureau policies.
For example, Experian may remove an authorized user’s account from the credit report if the primary account becomes derogatory.
Other bureaus like TransUnion and Equifax will likely report both positive and negative information.
Thus, you should expect for negative remarks on the primary cardholder’s account to affect your credit score.
They might not always count against you but I would just assume that they will, unless you know 100% for sure that they don’t.
So before you go requesting to be added to different credit cards do your best to get assurance that the credit history on that account is as flawless as possible.
Is the primary cardholder reliable?
Make sure you that the person adding you as an authorized user is not irresponsible.
If they end up maxing out the credit line that you’re added to, your utilization will go way up and your credit score will likely go way down!
Although you wont be personally responsible to pay the credit card bill, you will “pay for it” with a lower credit score.
Removing yourself as an authorized user
Usually, removing yourself as an authorized user is simple.
You contact the bank and tell them you need to be removed and they take you off. It is usually instant but may take a short while to show up on your credit report.
If it doesn’t show up as removed or if you want to expedite the process, simply file a dispute with the credit bureaus.
Just remember that your score might go down if you were relying on that account to lower your utilization, maintain a longer average age of accounts, etc.
Most, if not all, authorized users on business credit card accounts will not be reported to your personal credit report.
Therefore, being added to a card like the Chase Ink Business Cash, should do you no harm but also no good in terms of your personal credit report.
Authorized user FAQs
When you become an authorized user on a credit card, the credit card should show up on your credit report within a month or two.
The minimum age is determined by the bank. 18 is a common minimum age but some banks allow younger authorized users to be added.
Different credit models treat negative marks on the primary card holder’s account differently. Equifax and TransUnion will likely report both positive and negative information but Experian may not report derogatory marks.
The amount your score can go up depends on the factors that are holding you back and is nearly impossible to predict but in some cases you can expect a 20 to 50 point bump if you get added to the right account.
Yes, typically your credit report will display your responsibility as an authorized user which will let the lender know you are not the primary cardmember.
In most cases, there should not be a hard inquiry when you get added as an authorized user but you should check with the bank beforehand.
As you can tell, there are several ways that becoming an authorized user can benefit your credit score. It usually boils down to what factors are holding back your score and how that authorized user account can help improve those factors.
So by strategically seeking out an authorized user account, you can address the needs that are holding you back the most and see the most improvement.
Daniel Gillaspia is the Founder of UponArriving.com and the credit card app, WalletFlo. He is a former attorney turned travel expert covering destinations along with TSA, airline, and hotel policies. Since 2014, his content has been featured in publications such as National Geographic, Smithsonian Magazine, and CNBC. Read my bio.