How Does Being an Authorized User Affect Your Credit
When you apply for a credit card, you're often asked if you want to add an authorized user on the account. This means that by adding another person to the account they have authorization to use the credit card, and the cardholder must make the payments. The authorized user may use the account as well but they have no obligation to make payments on it.
Responsible Parties
There are several ways being an authorized user can affect your credit. The account you are authorized user on will appear on your credit report, as well as the primary cardholders. The primary account holder’s actions will appear like your own. The balance and payment history will reflect on your credit report. This can help you build your positive credit if the cardholder is responsible and pays on time and keeps their balance low. However, if they miss payments and have high balances it can affect your credit in the opposite way.
Joint Account Holder
Many people use the terms "authorized users" and "joint account holders" to be one and the same, but they're not. An authorized user essentially piggybacks on the credit of a friend or relative, entitled to use the credit afforded to the cardholder, but without the legal ramifications to pay the bill, points out Bankrate. Conversely, joint account holders share ownership of the account, with both parties sharing liability for repaying the debt.
Consider Your Options
The authorized user is a common scenario for parents who are helping their children establish and build a credit history. Primary account holders can limit how much of the credit limit the authorized user can spend. It is very useful and beneficial if the cardholder is responsible, in helping someone to establish and build a positive credit history and put them in a position to secure a credit card on their own.
Joint accounts are commonly established and used by spouses who share their finances and the obligations jointly. Joint account holders will share the same credit limit.
Use credit wisely, and protect your credit by only being an authorized user or joint account holder with someone who takes his or her good credit as seriously as you do.
Protect your credit history and be actively involved in creating and maintaining a solid credit history. You can achieve great credit!
Take control of your credit today and let your credit work for you.
Responsible Parties
There are several ways being an authorized user can affect your credit. The account you are authorized user on will appear on your credit report, as well as the primary cardholders. The primary account holder’s actions will appear like your own. The balance and payment history will reflect on your credit report. This can help you build your positive credit if the cardholder is responsible and pays on time and keeps their balance low. However, if they miss payments and have high balances it can affect your credit in the opposite way.
Joint Account Holder
Many people use the terms "authorized users" and "joint account holders" to be one and the same, but they're not. An authorized user essentially piggybacks on the credit of a friend or relative, entitled to use the credit afforded to the cardholder, but without the legal ramifications to pay the bill, points out Bankrate. Conversely, joint account holders share ownership of the account, with both parties sharing liability for repaying the debt.
Consider Your Options
The authorized user is a common scenario for parents who are helping their children establish and build a credit history. Primary account holders can limit how much of the credit limit the authorized user can spend. It is very useful and beneficial if the cardholder is responsible, in helping someone to establish and build a positive credit history and put them in a position to secure a credit card on their own.
Joint accounts are commonly established and used by spouses who share their finances and the obligations jointly. Joint account holders will share the same credit limit.
Use credit wisely, and protect your credit by only being an authorized user or joint account holder with someone who takes his or her good credit as seriously as you do.
Protect your credit history and be actively involved in creating and maintaining a solid credit history. You can achieve great credit!
Take control of your credit today and let your credit work for you.
Comments