The Credit Score Raising Hack You Need to Know About

published Sep 23, 2018
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So your credit score is less than perfect and you’re doing everything in your power to improve it. The bills are paid on time and you’re only charging about $20 on your credit card every month (because the limit is only $500!). But, even with all of this, your credit doesn’t seem to budge more than a few points because your bills aren’t tied to your credit or you have just one measly credit card. This can be very annoying, especially because you want to rent your own apartment or get a good rate on a mortgage somewhere in the near future. Well, if you have a really, really good friend or family member with stellar credit and they’re willing to toss you a favor, there is one option to look into that can boost your credit score: Getting added as an authorized user on their account.

When someone adds an authorized user (AU) on one of their credit cards, they’re essentially letting an AU get a card in the AU’s name, but using the credit profile of the original card holder. However, the original card holder assumes full responsibility for the card, and pays the bill. Think of it as essentially just making an authorized copy of a credit card and letting someone else use it. The authorized user is tied to a credit card and their credit history will be affected by the payment history.

This can be great, because if your friend or family member lets you become an AU, you essentially inherit some of their credit (it’s probably why your friends had great credit straight out of high school!). So, if they have good credit and pay the card off on time, some of that will rub off on your credit score. Many banks also offer the original cardholder a financial bonus when they add an authorized user. (Just a caveat: You just need to make sure that the credit card servicer reports the credit of authorized users.)

However, it is a more risky option than just paying bills on time and keeping your balance low. Also, it can be a tough sell to your friend or family member because they’re still responsible for how you use the card. “While it may be a good strategy for the person whose credit is weak, the counterpart is that it may have negative consequences for the person whose credit is good if the added card user doesn’t have impeccable usage and payment behavior going forward,” says Sarah Lewis, principal at Aequitas Wealth Management, in Los Angeles, California. She adds that the original card holder assumes a lot of risk when adding an authorized user. Not only are they responsible for making payments, having two users on one credit card means the percentage of the credit line used may be greater. This is something that negatively impacts a credit score.

One way around the risk of an authorized user running up huge debt is to be added as an authorized user without ever getting the card to use. “If someone with weak credit is added as an authorized user, but never uses the card, that would lift his or her credit score because the credit line would appear on his or her credit report,” says Lewis. However, since the line is tied to two people’s credit, the main cardholder really has to be responsible: If they all of a sudden don’t pay their card on time or uses too much of their credit, it can drive the authorized user’s credit down, too.

Because there can be a lot of risk for both parties involved, Lewis says she doesn’t recommend it. Instead, she urges people with low credit who want to boost their scores to pay on time without fail, keep credit usage as a percentage of credit line low, and gradually lift their credit line.

Though the option is not for everyone, it is something people do to raise their credit and it’s worth understanding the risks and rewards. If becoming an authorized user is your only way into the credit game and you have a friend or family member who is willing to put their credit on the line for you, it might be an option for you—just make sure you both talk to a trusted financial advisor before doing so in order to do it as safely as possible.