Building credit is a long road with few shortcuts. Becoming an authorized user on someone else’s credit card account is one common strategy for improving credit quickly.
If you’re just starting out and have a thin credit file, it’s likely to benefit you more than it will someone who’s been using credit longer and has missteps to overcome.
In either case, becoming an authorized user works best when paired with a plan to diligently build credit over time.
What being an authorized user means
If you become an authorized user on someone else’s credit card, you’ll be issued a card with your name on it that you can use to make purchases. As an authorized user, you’re not legally obligated to pay the debts that might accumulate on the account. That responsibility lies with the primary account holder.
If you can’t qualify for a credit card on your own, being an authorized user lets you enjoy the convenience of having plastic in your wallet.
How your credit report is affected
Because you’re not technically responsible for paying the bills, being an authorized user 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.
Choose 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 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.
While you’re working on your score, consider applying for a secured credit card. You’ll have to pay a deposit upfront if you’re approved. Secured cards allow you to prove that you can manage your own card. Being the primary account holder will have a much bigger impact on your credit score.
How to really build your credit
So what can you do to build your credit significantly? Unfortunately, there’s no quick fix for someone with bad credit or no credit, but there are some tried-and-true strategies.
- Pay your bills on time. Your payment history weighs heavily in your credit score, so don’t pay late — ever.
- Keep your balances low. Your credit utilization ratio, or the amount you owe compared with your total available credit, also plays a big role. Aim to use no more than 30% of your credit limit on any card, and lower is better.
- 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 opening lots of new cards in quick succession.
Updated April 6, 2017.