Building credit can be a challenge, particularly for those who have never had credit before. Fortunately, becoming an authorized user (AU) on a credit card can provide a pathway to credit-building for many consumers—even those with thin credit files, poor credit, or no credit at all.
Want to learn more about becoming an AU on a credit card? Keep reading this article, where we explore the risks and benefits of being a credit card AU, how to get added as an AU, and how to get the best results—plus how to maintain them long-term.
An AU is a consumer who is added to someone else’s credit card account in order to be able to use the account. While AUs can use the credit card to make purchases, they are not responsible for paying the bill. The liability for the debt falls solely on the primary owner of the account.
Generally, only the primary cardholder has the power to make changes to the account, such as adding more AUs or requesting a credit limit increase. However, in most cases, an AU should be able to remove themselves from the account if desired.
If the bank issues a new credit card for the AU, it is mailed to the address of the primary cardholder, who can then decide if they want to provide the card to the AU. In many cases, the AU is not meant to use the card at all. Rather, they are associated with the account only for the purpose of having that account reported on their credit report.
As an AU on someone else’s credit card, the card issuer will likely report the account to the credit bureaus on your behalf. If they do, as is the case for many major credit card issuers, you will see the credit card’s credit limit and its current balance on your credit report.
In most cases, the bank will also report the age of the account and its associated payment history, although there are exceptions to this rule. Some banks only report the history of the account starting on the date the AU was added rather than the date the account was opened.
Depending on the account’s history and current status, it can be valuable to have this extra information on your credit report. Similarly, however, if the account has been mismanaged, it can reflect poorly on your own credit record.
Being an AU on a credit card in good standing has many potential benefits.
By the same token, you also take on some risks as an AU, particularly if the credit card is mismanaged.
Yes, you can build credit using the AU strategy. In fact, becoming an AU is one of the best ways to build credit.
While other methods of building credit involve opening your own primary accounts and waiting for them to age, piggybacking on someone’s credit as an AU means all of the prior history of the account is added to your credit report, not just payments made after you were added.
If the credit card is a seasoned account in good standing, your credit file stands to gain years of positive payment history. In other words, you get the benefit of an aged account nearly instantly—without having to wait years for your own accounts to age.
To become an AU on a credit card, the first thing you’ll need to do is find someone who has a credit card that fits the profile you are looking for and they are willing to add you to. This could be a friend, family member, business partner, or other trusted person.
Once the primary cardholder has agreed to designate you as an AU on the account, they must contact the credit card company to make the request. Each issuer has a slightly different process for adding AUs, so depending on the issuer, the primary cardholder may need to do this via phone call or the bank’s online platform.
To add you as an AU, the cardholder will need to provide your personal information so that the bank can verify your identity and the credit bureaus can match the account to your credit report. This typically includes your full legal name, address, phone number, date of birth, and sometimes your Social Security number.
While building credit as an AU, you’ll get the best results if you build or maintain good credit in other ways at the same time.
Once you have acquired a history of responsible usage on the credit card, you can kick your credit-building up a notch by opening credit cards or loans in your name. As these primary accounts age, assuming they remain in good standing, they will become increasingly valuable to your credit score over time.
Just keep in mind that opening new accounts can have a temporary negative impact on your credit score at first. Not only are you opening new accounts, which lowers your average age of accounts, but you’re also racking up hard credit inquiries every time you apply for a new account. While inquiries only have a small effect on your credit score, it’s best to avoid applying for too many new accounts in a short period of time.
Ultimately, though, gradually opening several of your own primary accounts is a crucial step in the process of building credit that will pay off in the long run.
Of course, since payment history is the most influential factor in your credit score, making your payments on time should always be your first priority if you want to have good credit.
Setting up automatic payments is a good way to ensure that you don’t forget to pay your bills on time. However, if you’re concerned about having enough cash in the bank to cover payments, it might be a better idea to disable automatic payments and, instead, ask your creditor if you qualify for any financial hardship programs.
Keeping your credit card balances low is the next most important thing you can do for your credit. Since it demonstrates that you are a low-risk borrower, maintaining low credit utilization boosts your score significantly.
To calculate the individual credit utilization ratio on each account, take the balance on a credit card and divide it by the credit limit of that card. Multiply that number by 100% to get your utilization ratio expressed as a percentage. For example, if a credit card has a balance of $500 and a limit of $2000, the utilization ratio for that card is 25%.
To determine your overall utilization ratio, you simply add up all of your credit card balances and add up your credit limits, and then divide the sum of your balances by the sum of your available credit.
Don’t worry, you don’t have to do the math yourself—we’ve made it easy with our Tradeline Calculator. Just input your numbers and the calculator will show you both your individual and overall credit utilization ratios.
For FICO scoring models, the best utilization ratio to aim for is less than 10%. With VantageScore models, you only need to stay below 30% to get the best scores—but staying under 10% will ensure that you get maximum credit score points with both types of scores.
To keep your utilization low, avoid overspending on your credit cards. If you often exceed the 10% mark by the time your statement closing date rolls around, consider making multiple payments throughout the month to ensure the balance is low when the account is reported to the credit bureaus.
As we discussed previously, becoming an AU via a friend or family member does come with some risks. The main concern with going this route is you may get undesirable results if the primary owner of the account fails to manage it responsibly. Remember, if they overspend or miss a payment, your credit score will feel the repercussions.
The solution to this issue is to find reputable AU tradelines that are guaranteed to be in good standing, have low utilization, and report to the credit bureaus.
An equally important requirement when it comes to getting guaranteed results is choosing the right account or accounts to be added to. If an AU account is not a good match for your credit file and your desired results, you’ll likely end up disappointed in the outcome.
Assuming you have chosen a trusted source of guaranteed high-quality tradelines, the two main factors of an AU account to consider are the age and the credit limit. Age is important because it is associated with the extent of the AU account’s payment history, while the credit limit matters to your credit utilization.
Our Tradeline Calculator can help you figure out how much you need in terms of age and credit limit—try it out!
Selecting the right account to be added to as an AU is crucial. For more guidance, check out the Resources tab on our website, where you can find articles such as How to Choose a Tradeline, Why Age Is the Most Valuable Factor of a Tradeline, The #1 Secret on How to Unlock the Power of Tradelines, and Common Mistakes Made When Buying Tradelines.
Many AUs mistakenly believe that the most important aspect of a tradeline is its credit limit. This leads them to focus on becoming an AU on a credit card that has a high credit limit, with little consideration for its age. Unfortunately, this tactic is usually not the best way to go about determining which credit card would be best for you.
In reality, the secret to getting results from an AU account is age.
This may not seem obvious at first, since credit age itself only makes up 15% of a FICO score. However, what AUs need to remember is that with age comes payment history. The older an account is, the longer its history of payments is. In fact, with payment history making up an additional 35% of a FICO score, account age is essentially a proxy for 50% of the impact that account can have on a credit score.
For this reason, assuming the payments were all made on time, a long payment history is usually the biggest boost you can provide to your credit score.
Most, if not all, major credit card issuers report some form of AU information to the credit bureaus. However, some of them do not report certain types of information, such as the age of the account. Some issuers may not report AU accounts if they have negative marks or if the AU is younger than a certain age.
According to NerdWallet, the credit bureaus may also make exceptions to their reporting policies in these cases (if the tradeline has derogatory information or if the AU is too young).
It’s also important to note that while most credit card companies report AU tradelines, not all of them have excellent track records when it comes to reporting them accurately and consistently. If you want to make sure an AU account will show up on your credit report, be sure to research the policies and posting results of the credit card issuers you are considering.
AUs on credit cards are not responsible for paying off the debt accrued on AU accounts. While AUs can make purchases, only the primary cardholder is obligated to make payments. However, if the account holder does not fulfill this obligation, the AU’s credit will suffer, so regardless of legal liability, it is in the AU’s best interests to help ensure that the account is paid on time and managed properly.
Each credit card issuer has its own policies regarding how many AUs can be added to a credit card. Some banks do not restrict the number of AUs at all. Some banks enforce limitations on how many AUs can be associated with the account at the same time, while others may put a cap on the number of AUs that can be added within a year or within the lifetime of the account.
If you want to find out how many AUs can be added to a certain credit card account, get in touch with the credit card issuer directly.
Once you are added to a credit card as an AU, it should appear on your credit report the next time the account is reported to the credit bureaus. Therefore, it should take no longer than a month for the AU account to show on your credit report.
Do you have more questions about being an AU on a credit card? Leave a comment below and we can help!