3 Things to Know Before Becoming an Authorized Credit Card Holder

credit card purchaseHaving a high credit score will typically open up opportunities, including low mortgage loan rates in Ogden. While there are many ways to improve your credit score, perhaps one of the simplest and fastest ways is to be an authorized user of a friend’s credit card.

In case your friend has a high credit score, you can use this to your advantage. While this option is, by no means, not a replacement for working on raising your credit score, the extra boost it will give can mean a lot. Furthermore, wasatchpeaks.com cites three things that you should know before taking the plunge.

What exactly does becoming an authorized user mean?

As an authorized user, you will use another person’s credit card in your name to do things such as make purchases. The primary owner of the account will typically have to authorize you to use the account by adding your name to their credit card account.

However, your use of the card will be limited in that you cannot make major changes to the account. For example, you cannot add any other authorized users to the account. Additionally, it is the role of the primary user to pay the credit card bills and debts.

How will this affect your credit score?

Mostly, credit card providers will tend to report the activities of the account to the credit bureaus, which will affect your credit reports. As a result, the activities of the primary user can easily affect your credit score.

If the primary owner has a payment history and a low credit utilization ratio, your credit score will be affected positively. On the flip side, your credit score will take a beating if the primary holder misses payments.

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Who should you choose to be a primary card holder?

The best person to work with as a primary cardholder is one with good credit habits and with a low credit utilization ratio. Additionally, it should be a person you trust since a negative credit behavior could be detrimental to your own credit score.

While being an authorized user does affect your credit score, it does not affect the primary card user. With the partnering with a responsible card holder, you can land low mortgage interest rates as a benefit from the credit score boost. Choose the person wisely to enjoy the extra score boost.