Quick Tip #11- How to Piggyback on Someone Else’s Good Credit

Sean Hawley

How to Leverage the Good Credit of a Friend or Relative to Help Build Your Own.

Trying to build or repair your credit score is something that can take a long time, especially if you have had delinquencies or other credit challenges, . However, one strategy, often overlooked but highly effective, is being added as an authorized user on a friend or relative’s credit card account. This approach isn’t just about sharing credit cards; it’s a strategic move to bolster your creditworthiness.

Author’s note- this article is not written theoretically, and is based upon my own actual experience. My best friend added me as an authorized user on one of her accounts. She had outstanding credit for her entire life. Within 3 months my score was up 80 points, and it stayed there for years. (Shout out to CJ- thanks for all your help!)

The Power of Association

When you’re added as an authorized user, you get to piggyback on the credit history of the account holder. If the account holder has a stellar credit history, punctual payments, and a low credit utilization ratio, these positive attributes can reflect on your credit report too. It’s akin to having a cosigner for a loan, but without the need for the primary cardholder to stake their financial resources on your purchases.

Selecting the Right Account Holder

Not all credit accounts are equal when it comes to being an authorized user. To maximize the benefits, ensure the primary account holder exhibits these characteristics:

Pristine Payment History: The account should have a record of on-time payments. Late payments can negatively impact your credit score.

Long Credit History: The older the account, the better. An aged account adds depth to your credit history.

Low Credit Utilization: Look for an account with a utilization ratio below 30%. This indicates responsible credit management.

The Process

Becoming an authorized user is straightforward. The primary account holder needs to contact their credit card issuer and request to add you to the account. Some key points to remember are:

Verification: You’ll need to provide personal information such as your full name, address, date of birth and social security number.

Long Credit History: The older the account, the better. An aged account adds depth to your credit history.

Set Ground Rules: Have an open discussion about card usage, if any, and repayment expectations to avoid future misunderstandings. If you are even remotely irresponsible with credit card usage, don’t even let them give you the card. Note- It does not matter whether you use the card or not- your credit will get the same boost either way.

Caveats and Considerations

While being an authorized user can be beneficial, it’s not without its risks:

Shared Responsibility: If the primary account holder mismanages the account (e.g., maxes out the card or misses payments), it could negatively affect your credit score.

Relationship Dynamics: Money matters can strain relationships. Ensure both parties are clear about expectations and responsibilities.

In my case, my friend added me to her an account so that I could have a card in emergencies only. I didn’t even keep in my wallet. I think in over 5 years I only used it once, for an emergency vet bill, (and I asked her beforehand). She and I both knew that I’m not the greatest at remembering my bills, so she really did me a solid by trusting I wouldn’t abuse the privilege. I also knew she would kill me if I screwed up her credit, so this was an extra incentive to be responsible.

Temporary Solution: While being an authorized user can help build your credit, you should also work on establishing your credit independently.

This is a proven method that actually works. The amount of bump to your score will depend almost entirely upon the other person’s credit habits. But you also need to make sure you keep your own accounts in as good a standing as possible. Even if you have older accounts that are on your credit report, do your best to get and keep current what you can. And one more thing- when you see that nice shiny new score on your credit report, do you something nice for them to show your appreciation.

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