Understanding the Role of an Authorized User
An authorized user is someone added to another person's credit card account who can make purchases but isn't legally responsible for the debt. This arrangement, sometimes called "credit piggybacking," can be particularly beneficial for those just starting their credit journey.
Benefits of Being an Authorized User
- Immediate credit history boost
- Access to established credit
- No financial liability
- Learning credit management without full responsibility
- Potential improvement in credit score
Getting Started
Choose the Right Account and Primary Account Holder
Look for someone with:
- Excellent payment history
- Low credit utilization
- Long-standing account history
- Willingness to add you as an authorized user
Pro Tip: Family members, particularly parents or spouses, are often the best choices for primary account holders.
Confirm Reporting Practices
Before becoming an authorized user, verify that the credit card issuer reports authorized user activity to all three major credit bureaus:
Best Practices
For Primary Cardholders
- Maintain low credit utilization (under 30%)
- Make payments on time
- Monitor account activity
- Set clear expectations with authorized users
For Authorized Users
- Use the card responsibly (if given access)
- Make small, manageable purchases
- Pay off your purchases to help maintain low balances
- Monitor credit reports regularly
- Communicate with the primary cardholder
Building Independent Credit
While being an authorized user is helpful, consider diversifying your credit profile:
- Secured Credit Cards: These require a deposit and help build credit independently
- Credit Builder Loans: Offered by banks and credit unions specifically for credit building
- Store Credit Cards: Can be easier to qualify for
- Using services like Experian Boost
Monitoring Progress
Track your credit building progress through:
- Free credit monitoring services
- Annual free credit reports from AnnualCreditReport.com
- Credit score tracking through credit card issuers
Potential Risks
For Primary Cardholders
- Responsibility for all charges
- Potential credit score impact from authorized user's actions
- Difficulty removing negative history
For Authorized Users
- Dependency on primary cardholder's habits
- Limited control over account management
- Possible negative impact from poor account management
When to Remove Yourself
Consider removing yourself as an authorized user if:
- The primary cardholder develops poor credit habits
- You've established sufficient independent credit
- The relationship with the primary cardholder changes
- The account starts negatively affecting your credit score
For more information on credit building strategies, visit MyFICO for expert advice and resources.