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

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

The Power of Association

Selecting the Right Account Holder

  • 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

  • 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

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

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