Is your credit score not as high as you’d like it to be? If so, you may have heard of becoming an authorized user on another person’s credit card account to boost your credit score.
Being added as an authorized user on a strong account can really save you some money in the long run. It can help you qualify for a better rate before you buy your next car or lock in a mortgage. That being said, there are a few things you should know about it before moving forward.
Before you add an authorized user or become one, make sure you understand what you’re getting yourself into.
What is an authorized user?
An authorized user on a credit card account is a person who can use that credit card the same as the primary account holder. This means they can make purchases and make payments just as the person who opened the account.
Because the responsibility is shared with the primary account holder, any information regarding the account is also linked. When an authorized user is added to an account, their credit report and credit score are impacted by the account, regardless of when they were added.
What is a tradeline?
In the financial world, the term tradeline is just industry jargon for a credit account. You may have also heard the phrase “seasoned tradeline,” which basically means that the credit account is older than two years and has an established credit history.
An authorized user tradeline is a tradeline that is shared with an authorized user. The entire credit history is shared. Even if the user isn’t added until 2021, but the account was opened in 2013, they will get every bit of positive credit history that goes with the account — all eight years of it.
Who can be added as an authorized user?
It is suggested that only family and close friends ever be added to an account. Technically, you can become an authorized user to anyone you know, regardless of how you met or how long you’ve known them. In fact, you don’t even have to know them, but we’ll talk more about that below.
Because becoming an authorized user involves sharing your personal financial details, only ever do so with a family member, loved one, or close friend you trust.
Does making someone an authorized user help their credit?
Yes, it can help improve a person’s credit scores. It usually takes about 60 days before any changes can be seen on the credit report. Once a tradeline is on the credit report, the credit scores will adjust accordingly.
Just know that if you have serious credit issues like receiving calls from debt collection agencies, dealing with substantial medical debt, or missing a lot of credit card payments, you won’t see that much of an improvement. You’ll see your credit score improve somewhat, but it won’t increase by leaps and bounds.
What kind of accounts should be considered?
Only someone with a good credit score should consider adding authorized users to their account. The account should meet the following criteria:
The account is two years old or older.
Authorized users can be added at any time. However, if you’re looking to receive or give a credit boost, it’s not recommended to do so before the account is two years old. If the account is younger than two years, the credit score boost will be insignificant.
Seasoned tradelines that have been open for several years and have perfect payment history (on-time payments, low balance) are the best accounts to add someone to. This is because the new user gets all the account’s payment history added to their credit report, no matter how old the account is.
The account should have zero late payments.
Whatever history is on the account is transferred to the new account holder. Even if the account is presently in good standing, it will hurt the new authorized user’s credit score if it ever had delinquent payments. Past missed payments are transferred to the new account holder’s credit report. For this reason, only credit cards that have always been in good standing are recommended.
The account should have a low balance.
Credit cards that are frequently maxed out or that have a balance over 50% should not be used as authorized user tradelines. Credit scores get a bigger boost if the revolving debt is low. On-time payments are good, but if there isn’t much available credit left on the credit card, you will not see a good bump in their credit scores. In fact, their scores could even go down as a result of being added to the account.
Can being an authorized user hurt your credit?
Absolutely. If the account has many delinquent payments, or if it is often maxed out, then it can definitely hurt an authorized user’s credit score. Only accounts that are in good standing and have a zero to low balance should ever be considered for this purpose.
How long does it take for authorized user tradelines to post to a credit report?
It generally takes about 30 to 60 days for the tradeline to appear on your credit report. However, it can be sooner. It just depends on how close to the reporting date you were added.
If you’re in a rush to repair your credit and need your score to rise because of an application, it’s best to delay any financial plans until the tradeline has had time to post to your account.
Do tradelines ever not post to your credit report?
Yes, sometimes tradelines are not reported to the three major credit reporting agencies. There are numerous reasons why this could happen. Some things that can impede tradeline reporting include:
- Type of credit line at the bank (or credit card)
- Bank of the tradeline (meaning which credit card it is)
- Authorized user shares the same address as the primary user
- Lock on the credit report
- Fraud hold on account
- Clerical errors
If this happens to you, the best thing you can do is pick up the phone and call the bank or credit card. If it’s a common occurrence, they will most likely be able to tell you why it happened and what you can do about it.
Are authorized user tradelines legal?
There are no laws against this type of financial piggybacking, but lawmakers are calling for the system to be modified. Currently, some sites exist where, for a fee, you can become an authorized user on a strong account without having to have an existing relationship with the account holder.
Authorized users get all the positive payment history that accompanies the credit card. However, these sites are anticipated to be shut down in the near future. Whether there will be any fallout for the people who took part in them remains unclear.
Even major credit cards exist in nebulous territory when it comes to tradelines. For example, Capital One, Chase, and Bank of America all allow children to be added to the primary account holder’s card.
It doesn’t matter how young they are. If they are the primary account holder’s child or dependent, they can be added to the card. Though moral, allowing minors to be added to an account only helps those in favor of “piggybacking” because it opens the door to legal maneuvering.
What’s the big deal?
People who engage in tradelines are, in a sense, manipulating the credit system. This is only a stone’s throw away from someone who manipulates the stock market. The credit system is in place to help banks make wise investment choices. If they can’t do this and they fail, the economy is at risk.
If it ever goes to court, expect changes to come from Congress regardless of how the pendulum swings.
Where can you buy tradelines?
There are companies out there that sell seasoned authorized user tradelines to boost your credit score. There are many to choose from, including Superior Tradelines, Boost My Score, and Top Tradelines. If you choose to buy a tradeline, make sure they have a system in place to refund your money if the tradeline doesn’t post to your account. As mentioned above, this does happen once in a while.
How much do authorized user tradelines cost?
Want to buy a tradeline? Expect to spend a few hundred dollars, if not more, on a seasoned tradeline. They certainly don’t come cheap but could potentially save you a lot of money if you’re in the market for a new house or car.
Authorized user tradelines can give your credit score a real boost when you need it. But if your credit score is meager because of numerous delinquencies, don’t expect to go from bad to great credit overnight. These things take time. To get your credit score where you want it, first, pay down your debt if you have any, and make sure you pay all of your payments on time moving forward.