Will Authorized User Status Help You Build Credit?

Being added to someone else's credit card can allow you to benefit from their payment history and available credit.
Oct 18, 2021

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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.

If you're just starting out and have a thin credit file, it's likely to benefit you more in terms of payment history than it will if you've been using credit longer and have setbacks to overcome.

But it can have a significant impact for newbies or rebuilders because it affects a major credit scoring factor called credit utilization, or the amount of your credit card limits that are in use. Only payment history has more influence on credit scores.

Let's say you have a single card with a credit limit of $1,000 and your average monthly statement runs about $300. You're using 30% of your credit limits. If your mom adds you as an authorized user to her lightly used card with a $15,000 limit, your overall utilization could fall dramatically.

What is an authorized user on a credit card?

If you become an authorized user on someone else’s credit card, the issuer will send them a card with your name on it. The credit card issuing company holds the primary account holder responsible for paying charges on the account, not the authorized user.

Because charges you make have to be paid by the account holder, both you and the account holder need to agree ahead of time whether you'll use the card or simply be listed as an authorized user. The effect on your credit is the same, even if the account holder never gives you the card to use.

If you cannot qualify for a credit card on your own, being an authorized user can help you beef up your credit history and can help with "credit age," a scoring factor. If you don't yet have a FICO score, the most commonly-used scoring model, it can shorten the time needed to generate one to less than six months. It may also let you enjoy the convenience of having plastic in your wallet.

How being an authorized user on a credit card works

Because you're not responsible for paying the bills, being an authorized user on a credit card may not have a huge impact on your credit score. But it helps those with little or no credit history beef up their credit files.

Ask someone who uses a small portion of their credit card limit and has a clean payment history on an account that's been open for a long time. Make sure the card issuer reports authorized users to the credit bureaus: If your authorized user status doesn't show up on your credit reports, it won’t help your score.

Authorized user status alone might not increase your chances of getting approved for credit cards and loans in the future. Lenders checking your credit history want to see that you’ve managed your own credit accounts responsibly.

Being the primary account holder on a credit account will have a bigger impact on your credit score than being an authorized user. While you're working on your score, also consider the following options:

  • Applying for a secured credit card. You may have to pay a deposit upfront if you're approved.

  • Exploring alternative credit card options, which do not require deposits.

  • Applying for a credit-builder loan from your local credit union or companies like Self and Kikoff.

How to build credit habits on your own

So what can you do to build your credit significantly? Whether you have a bad credit score or no credit score, here are some tried-and-true strategies:

  • Pay your bills on time. Your payment history weighs heavily in your credit score, so aim to pay at least the minimum payment on time.

  • Keep your balances low. Your credit utilization ratio (the amount you owe compared with your total available credit on your credit cards) also plays a big role in your score. Aim to use no more than 30% of your credit limit on any card if possible, and lower is better. If you can lower it to single digits, you are likely to get even better results.

  • Take the long view. The length of your credit history is also important. Keep old accounts open even if you don't use them often — unless there's an annual fee or another good reason to close the account.

  • Avoid applying for multiple credit cards in a short time. Instead, space applications six months apart and research the best credit card for your needs before applying.

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