After moving to the U.S., it may seem difficult to start building a U.S. credit history from scratch. If you have family or close friends in the U.S., becoming an authorized user on one of their credit cards could be a quick and easy way to build your credit. Even if you’ve started establishing your U.S. credit history by using your own credit card, becoming an authorized user on another credit card could further improve your credit scores or help to build it faster.
This article will discuss what an authorized credit card user is, along with the benefits and risks to your U.S. credit history in becoming one.
What is an authorized user?
An authorized user is someone who gets added to an existing credit card account. The authorized user doesn’t need to apply for the credit card, and they can receive their own card that’s connected to the account.
As the authorized user makes purchases, the primary account holder—the person who opened the credit card—can see their activity and may be able to set limits on how much they can spend. The arrangement is common among married couples, business partners, and parents who add their children as authorized users. However, you don't need to be related or work with the primary cardholder to become an authorized user.
While some people have an informal agreement that the authorized user reimburses the primary cardholder for any purchase, the primary cardholder is ultimately responsible for the credit card payments, including the authorized user’s purchases.
How being an authorized user can help your credit
You do not need a good credit history, or even any credit history, to become an authorized user on a credit card account.
Once you become an authorized user, the account activity linked to your name will generally be reported to all three major U.S. credit bureaus: Equifax, Experian and TransUnion.
In fact, you don’t even need to use the authorized user credit card in order to reap these benefits. By having your name on an account, you will benefit from the primary cardholder’s credit activity, including:
Increasing your average account age: by joining a new account, the account’s history could increase your credit history’s length and the average age of your accounts, which is good for your credit scores.
Reflecting a track record of on-time payments: the card’s payment history can also help your credit if the primary cardholder makes the payments on time.
Being linked to active credit usage, which may help or hurt: the card’s utilization ratio will also affect your credit scores, which might be good or bad depending on the card’s recent balance and credit limit.
While these effects are generally true, credit card issuers and credit bureaus have different policies for reporting and using authorized user accounts.
For example, some credit card companies report positive and negative information, such as on-time payments and late payments. As a result, the authorized user account could help or hurt your credit scores depending on how the primary cardholder manages the account. Other card issuers don’t report late payments, which means the late payments would not hurt your credit.
You can call the credit card company to ask whether it will report your authorized user account to the bureaus and what information it reports.
As long as the primary account holder responsibly manages the account, becoming an authorized user can be a way to accelerate your credit-building journey—especially if you’re new to the U.S. and do not yet have a U.S. credit history.
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How to become an authorized user
The primary cardholder needs to add you as an authorized user, which they may be able to do online or by calling their card issuer.
At a minimum, they need your name and date of birth for the card issuer to report the account to the credit bureaus. Several card issuers also require a Social Security number and either your phone number or address.
Primary cardholders can also remove authorized users at any time.
Why you shouldn’t buy authorized user tradelines
Watch out for companies that offer to add you as an authorized user to an existing credit card for a fee. Some credit repair companies might suggest this approach, and you can find companies online that sell authorized user “tradelines”—the industry term for an account on a credit report.
Paying to become an authorized user isn’t illegal, and it might increase your credit scores, but it can harm you in other ways. The practice is common among criminals trying to commit credit fraud, and creditors might reject your application—or flag it as potentially fraudulent—if you purchase authorized user accounts.
The takeaway
If you’ve recently moved to the U.S. or are otherwise new to credit, becoming an authorized user on an existing credit card can be a powerful way to start building your U.S. credit history.
For instance, if you’re an international student who has a relative in the U.S. or you’re joining a family member on a spousal visa, these family members may be able to add you to their account in order to kickstart your credit-building journey in the U.S.
Make sure to check with the cardholder’s bank on the exact requirements for adding an authorized user and credit reporting policies once they have been added to a credit account.
If you have moved to the U.S. from abroad, you may also be able to use Nova Credit to apply for your own credit card, phone plan, and more from using your hard-earned credit history from back home. If you are approved for these products and manage them responsibly, you will start to quickly build a U.S. credit history, without ever needing to become an authorized user.
Currently, Nova Credit serves individuals coming from Australia, Brazil, Canada, Dominican Republic, India, Kenya, Mexico, Nigeria, Philippines, South Korea, Spain, Switzerland, and the U.K.
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