Many of you know credit card companies allow you, as a Primary, to add an Authorized User(s) to your account.
First let me explain what an authorized user is. An authorized user is a person whom the primary account holder deems worthy enough to be added to their account. Or in lamest terms: authorized to use the credit card.
Once an authorized user is added the hosting credit card company will send out the authorized user's credit card. It will be mostly similar to the one you have for the account with a few noticeable differences! You'll find the last four digits on the card to be different as well as the name, of course, is that of the authorized user you have added.
Now that that is clarified, lets move on to the real reason you're reading. By adding the authorized user to your account you are not only giving them access to the credit available on that card. You're also providing credit history to the credit bureaus.
Let's talk about why this is good. Its good if your credit card is lowly utilized. Meaning on a percentage scale, you only use about 10% - 20% of that available credit. Next, the age of the card will post to their credit as well. This can be a great help to a son or daughter fresh out of their teens, taking steps in the big world, because their credit history is typically zilch. Adding them as an authorized user to a credit card that has been around for a while will help their credit Because it will add YOUR credit cards history to THEIR credit profile. Lastly, it can also help them gain access to credit without posting a hard inquiry to their credit profile.
Now for the juicy stuff. Adding an authorized user to your card CAN be detrimental to them. If you were to add someone to your card while its utilization is over 75%, it would reflect to the credit bureaus just the same. This appears to be a poor use of credit and the credit card companies don't like to see highly utilized cards. And even worse, if you have added them to more than just the one card at <75% utilization, you could be preventing them from gaining additional credit or from qualifying for a loan and not just dropping their score. Additionally, if the Primary is not diligent on making their payments, this demerit will be logged on the authorized users side as well.
Now, it gets really juicy! There are companies out there that compile lists of cardholders who have kept their credit squeaky-clean. Low utilization, no missed payments and a good amount of history. If you are in need of a little boost to your score, seeking one of those companies to get a Tradeline or two added to your credit profile might be your best option. And sometimes, they can boost your score in a matter of weeks! Check out the link below to find a company that specializes in just that!
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