Becoming an authorized user on the credit card of someone with good credit is an effective way to build credit as a newbie. The only catch is, if the person makes late payments or misses any payments, it will affect your credit score too.
Becoming an authorized user helps with the length of your credit history, which accounts for 15% of your FICO® Score, but is a less influential factor in your VantageScore®. This may not seem like much of a difference, but in the long run, the length of your credit history can also help lenders decide favorably on approving your loans.
A 2018 Credit Sesame survey found that people with bad credit who were added as authorized users saw a 24% increase in their FICO Score in 6 months and a 30% increase in 12 months. The lower your starting credit score, the more you benefit from being an authorized user.
However, there are many lenders who do not consider credit scores accumulated by authorized users as valid unless it is through a reliable primary cardholder like a parent or spouse. This is because they see it as an unfair advantage given to someone with bad credit to build their scores without doing the work of being a responsible spender. So, you may not get approved for a loan or credit card even if you have a good score if all your points have been accumulated through being an authorized user.
It is also a good idea to check if the lender reports to all major credit bureaus – Experian®, TransUnion®, and Equifax® – to help you make the best decision on whether to become an authorized user.
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