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Whether you are a young adult, a new U.S. citizen without a credit history, or even someone simply trying to rebuild a credit history, the process of building up your credit score can be long and difficult. You need credit to build a credit history. One way to begin trying to build credit is being an authorized user on a credit card account.
As an authorized account user, you are not the actual account holder. Instead, there is another person who owns the account, and you, as an authorized user, have access to that credit.
How to Become an Authorized User
The first step to building credit as an authorized user is to find someone who is willing to add you to a credit card account. The credit line is based on the cardholder’s credit history, not the authorized user’s. However, you can build credit if the credit card company reports the history of that particular card to your credit report.
Authorized users may use the card but are typically not financially liable for paying it. So you might prefer to ask a family member or your partner to add you to their account. Even your best friend might not want the risk of adding you as an authorized user on a credit card account. Alternatively, you can reduce the primary cardholder’s risk by letting them keep your card so you don’t have access to it at all.
Just be sure that the primary user of the card pays the bill on time every month and carries a low or no balance on that card. You’ll reap the benefits of the primary user’s good credit history. What you don’t want is to get someone else’s bad credit history on your credit report, so choose your credit-building partner wisely.
The primary cardholder can contact the card issuer to add you as an authorized user and will likely have to give them your personal identifying information.
Finding the Right Credit Card for Authorized Users
You’ll also need to choose your card wisely. Pick a credit issuer that reports the card’s activity to all users’ credit reports.
For example, Chase reports account activity to the credit reporting agencies for every user on a card, including authorized users. Capital One also reports account activity to the credit bureaus for an authorized user. The account activity would then likely have an impact on the authorized user’s credit score – which is the reason you’re doing this.
Some card issuers may not report the activity to the bureaus for the authorized user. But once your Social Security number is listed in the database of cardholders, you might be able to obtain your own credit account with the issuer down the road.
Building Credit With Your Own Card
Even a couple of months as an authorized account user can quickly help you to build up your credit score and credit history. This can boost your odds of getting approved for a basic credit card with a small credit limit.
Then you’ll be building a credit history with your own credit card account. Each month that you make charges and pay them off on time you are continuing to build good credit.
Author: Jeff Gitlen
Jeff Gitlen writes about a wide range of finance topics including everything from student loans to credit cards to small business financing. Jeff's work has been featured on a number of sites including Bloomberg, CNBC, Forbes, Market Watch, and more.