The easiest and fastest way to increase your credit score is to become an authorized user on a family member’s credit card account.
This is an excellent strategy for teen children or people who have suffered a severe financial crisis. Both are interested in building or rebuilding their credit. As an authorized user, they receive the benefits of someone else’s credit but have no contractual obligation to pay the bills.
A person’s individual credit score is not considered when becoming an authorized user. Neither is his or her credit report reviewed. There is no pre-qualification for an authorized user status on a credit card. However, the credit card’s history will be reported on the authorized user’s credit report as long as the authorized user is related to the account holder.
Becoming an authorized user on a family member’s credit card will quickly raise your credit score, even after bankruptcy or other financial disaster, by allowing you to “borrow” the account holder’s clean credit history.
Family members may not be receptive to adding you to their credit card accounts if they believe you will not honor your commitment to repay the charges you make. You must assure them of your ability to re-pay. Show them how you will repay charges or tell them you do not want a credit card or access to their account. Your goal is to become an authorized user to increase your credit score.
To protect the family member adding you as an authorized user, here are two suggestions:
- The account holder should shred the credit card that arrives in your name.
- The account holder should never give you the account number, credit card expiration date, or card security code.
Both of you will then benefit. How? Your credit score will increase because you have a good credit report. The account holder benefits because he or she is able to help a family member without worrying about irresponsible behavior on your part.
Authorized users must be related to the account holder for their bad credit scores to benefit from this strategy. Try to choose someone with the same last name and address. Otherwise, the credit-scoring bureaus might not recognize your status as an authorized user and your credit score might not improve.
Call the credit card company and ask if they are reporting your status as an authorized user. You can also check your credit report to see if the account is appearing. If not, choose another account holder.
Be sure that you also choose a responsible relative with an account in good standing. If you become an authorized user on an account that becomes delinquent, guess what happens? Your score will drop. Therefore, pick an account with a clean history of payments and a utilization rate of no more than the 30 percent limit. If the balance exceeds 30 percent, or if the account holder makes a late payment, you should immediately remove your name as an authorized user so the negative information does not hurt your credit score.
Authorized users usually see a quick jump in their score. In twelve or eighteen months remove yourself from the account because you should be able to qualify for loans on your own.