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 complex decision, as it has the potential to impact your credit score in various ways. Understanding how this process works and its implications on your creditworthiness is crucial before making a decision.
Understanding Credit Scores
Credit scores are numerical representations of your creditworthiness, calculated based on various factors such as payment history, credit utilization, length of credit history, types of credit used, and new credit. These scores are used by lenders to determine the likelihood of you repaying loans and credit card debts.
The Impact of Adding Yourself as an Authorized User
When you are added as an authorized user on someone else’s credit card, your credit report will reflect the credit history of the primary cardholder. This means that if the primary cardholder has a good payment history, a low credit utilization ratio, and a long credit history, it could positively impact your credit score.
Positive Implications
1. Improved Credit Score: If the primary cardholder has a good credit score, adding yourself as an authorized user can help boost your credit score, especially if you don’t have a long credit history or if your credit score is low.
2. Credit Mix: Being an authorized user on a credit card account can contribute to a diverse credit mix, which is another factor that can positively affect your credit score.
3. Credit Utilization: If the primary cardholder has a high credit limit and uses the card responsibly, the low credit utilization ratio could benefit you.
Cautionary Notes
1. Negative Implications: If the primary cardholder has a poor payment history or high credit utilization, it could negatively impact your credit score.
2. Lack of Control: As an authorized user, you have no control over the primary cardholder’s spending or payment behavior, which could lead to unexpected charges or late payments.
3. Joint Liability: In some cases, authorized users may be held jointly liable for the debt on the credit card, so it’s important to understand the terms and conditions of the account.
Conclusion
Adding yourself as an authorized user on someone else’s credit card can help improve your credit score in some cases. However, it’s essential to consider the potential risks and benefits before making a decision. If you choose to proceed, ensure that the primary cardholder has a good credit history and is responsible with their credit card usage. Always monitor your credit report and score to stay informed about the impact of this decision on your creditworthiness.
