Will adding myself as an authorized user help my credit?
Adding yourself as an authorized user on someone else’s credit card can be a controversial topic. While it may seem like a straightforward way to boost your credit score, there are several factors to consider before making this decision. In this article, we will explore the potential benefits and drawbacks of becoming an authorized user and help you determine if it’s the right choice for you.
Understanding the Concept of an Authorized User
An authorized user is someone who has been granted permission to use another person’s credit card but is not responsible for paying the bill. The primary account holder is still accountable for the charges made by the authorized user. When you add yourself as an authorized user, the credit card activity will appear on your credit report, which could have a positive or negative impact on your credit score.
Benefits of Adding Yourself as an Authorized User
1. Improved Credit Score: If the primary account holder has a good credit history and a low credit utilization ratio, becoming an authorized user can positively affect your credit score. The positive credit history will be reflected on your report, and you may see an increase in your credit score over time.
2. Credit Mix: Adding a credit card to your credit mix can also be beneficial. Credit scoring models consider different types of credit accounts, such as revolving (credit cards) and installment (loans) accounts. By having a credit card, you can diversify your credit mix and potentially improve your score.
3. Building Credit History: If you have limited credit history, becoming an authorized user can help establish a positive credit history. This can be especially helpful for young adults or those who are new to the credit world.
Drawbacks of Adding Yourself as an Authorized User
1. Potential Negative Impact: If the primary account holder has a poor credit history or high credit utilization, becoming an authorized user could harm your credit score. The negative credit activity will appear on your report, which could result in a lower score.
2. Lack of Control: As an authorized user, you have no control over the spending or payment behavior of the primary account holder. If they fail to make payments or exceed their credit limit, it could negatively impact your credit score.
3. Privacy Concerns: Sharing credit information with someone else can raise privacy concerns. Make sure you trust the primary account holder and that they will use the credit responsibly.
Conclusion
Adding yourself as an authorized user on someone else’s credit card can be a double-edged sword. While it may help you build or improve your credit score, it also comes with potential risks. Before making this decision, consider the pros and cons, and ensure that you trust the primary account holder to use the credit responsibly. If you decide to proceed, regularly monitor your credit report to stay informed about any changes and take appropriate action if necessary.
