Does it help my credit to be an authorized user?
Being an authorized user on someone else’s credit card can be a topic of much debate. Many people wonder if having this status can positively impact their own credit scores. In this article, we will explore the potential benefits and drawbacks of being an authorized user and help you determine if it is a beneficial step for you to take.
Understanding the Role of an Authorized User
An authorized user is someone who is allowed to use another person’s credit card but is not responsible for repaying the debt. The primary account holder, also known as the primary cardholder, is the one who is ultimately responsible for the credit card account and any associated debt. When you become an authorized user, your credit report will reflect the credit card account, but you will not have access to the card unless the primary cardholder grants it to you.
Benefits of Being an Authorized User
1. Building Credit History: One of the main advantages of being an authorized user is that it can help you establish or improve your credit history. Since your credit report will show the credit card account, you can benefit from the positive payment history of the primary cardholder.
2. Credit Score Improvement: If the primary cardholder has a good credit score and consistently pays their bills on time, this can positively affect your credit score. Lenders often look at the length of your credit history and the types of credit you have used, so being an authorized user can contribute to a more diverse credit mix.
3. No Credit Card Needed: If you do not have a credit card of your own, becoming an authorized user can be a way to start building credit without the need for a separate credit card application.
Drawbacks of Being an Authorized User
1. No Control Over Spending: As an authorized user, you have no control over the spending habits of the primary cardholder. If they accumulate debt or make late payments, it can negatively impact your credit score.
2. Limited Access: You may not have access to the credit card itself, which can be a disadvantage if you need to make purchases or emergency transactions.
3. No Direct Responsibility: Since you are not the primary cardholder, you are not directly responsible for the debt. However, if the primary cardholder defaults on the account, you may still be affected, especially if you are living together or financially intertwined.
Conclusion
In conclusion, being an authorized user can help your credit in several ways, such as building credit history and improving your credit score. However, it is important to consider the potential drawbacks, such as losing control over spending and not having direct responsibility for the debt. Before becoming an authorized user, weigh the pros and cons to determine if it is the right decision for you. Remember that credit is a complex and personal matter, and what works for one person may not be suitable for another.
