Updated for 2019 – This information is current. If you have questions or comments, please leave them below.
There are many myths, misconceptions, and misunderstandings about what an Authorized User Tradeline is and how to use it properly. Some say that it helps your Credit Score, some say that it hurts your Credit. Most people are using these seasoned tradeline accounts as a way to improve their FICO scores or to start building a Credit History. First, you must understand how your credit score works, then you can start working to improve your credit. But like most good things, there are people out there who exploit them for bad. I am here to give you all the facts about Authorized User Accounts and explain how to properly, legally and ethically become an Authorized User on a Credit Card so you can adopt a seasoned tradeline on your Credit Report.
What is an Authorized User Tradeline?
An Authorized User is someone who is “authorized” to be on a Credit Card Account. This means that they are authorized to talk to the bank about the account, make payments on the account and agree to the account reporting on their Credit Report. When you become an Authorized User on someone’s Credit Card account, you agree to adopt the future and past credit history of the account. Some people call this a Seasoned Tradeline, since you are adopting the credit history and past payment history of the account. This means that if the Credit Account has been open for 8 years, has always been paid on time, once you become an Authorized User on the account, you will adopt the 8 year payment history on your Credit.
Authorized User Accounts are typically only for Credit Cards. Auto Loans and other installment loans can add you to an account as a co-borrower. There is a difference in the risk between an Authorized User and Co-Borrower. We don’t recommend becoming a co-borrower. You will usually have to apply to become a co-borrower and that means having them pull a copy of your Credit Report. This will cause an inquiry and there is a possibility they could deny your application if you don’t have good credit. If you are approved, you will have financial responsibility if this account goes delinquent.
To become an Authorized User on a credit card, there is no application, no credit check, no inquiry on your credit report and no risk of being denied. If the account holder misses a payment or defaults on the balance, you will be able to work with CreditCEO to have this information disputed and removed from your credit history.
How To Boost My Credit Score With An Authorized User Tradeline
Being added to a family or friends credit card account as an Authorized User can help improve your Credit Scores since you adopt the credit history from that creditor. Within 60 days of being added to a credit tradeline as an Authorized User, you will see the account report on your credit and your credit scores will adjust accordingly. If you have a lot of debt collection accounts, or medical debt collections, past late payments or negative credit, you will not receive as much of a credit score improvement and you’ll want to seek professional help to try to remove these accounts from your credit history. You can call us to and we’ll review your case.
Picking The Right Authorized User Tradeline
You want to make sure that you follow these simple rules before you ask your friend or family member to add you to their account. If you follow these rules, the Authorized User Account will help improve your credit scores. If you don’t want to have an Authorized User Tradeline, or you have trouble asking a friend/family member for help, you can start building your credit with a secured credit card. The main difference is you’ll be starting at square 1 with your payment history, instead of adopting years of payment history once the AU Tradeline reports to the Credit Bureaus.
Only Become Authorized User On A Close Friend Or Family Members Credit Card
It is risky and borderline unethical to purchase or rent Authorized User Tradelines from unknown, online companies and sometime in the near future it may be illegal. You want to ONLY become an Authorized User on an account of someone that you are related to, live with or are very close friends with. If you don’t have someone that will add you, you should get a Secured Credit Card from your local bank or Discover and start building your credit history by making on time payments and keeping your balance low. Some FICO Scores are claiming that they won’t honor Authorized User Accounts to increase your credit score if they aren’t from a direct family member. So you really want to ask your family first, before asking a friend, roommate or colleague. This way you will ensure that if there are changes, you are ahead of the curve.
Account Must Be Open For A Minimum Of 2 Years
You only want to be added to an account if it is over 2 years old. Anything younger than 2 years won’t give you as much of a benefit until the account has seen at least 24 months of on-time payments. You also want to find an Authorized User Account that has the longest account history. You adopt the full credit history, even if it is 10+ years of history, so see if Grandma and Grandpa have a Credit Card they can add you to.
No Past Late Payments
The Credit Card must have NO past late payments. You can always have the account owner check their credit report (Free3Scores.com) and you can verify that the account has never had any past late payments or negative marks. You adopt the credit history of this account, even if it is negative, so make sure it’s not going to hurt you first. This goes into our next point…
Maintain A Low Revolving Balance
You will receive the most credit score increase by becoming authorized user on a seasoned tradeline that currently has and maintains a low balance on the account. Your Credit Score is heavily weighted upon your “revolving debt ratio”, so make sure that you are not being added to an account that is frequently maxed out or carrying a balance over 50% of the available credit limit. Your revolving debt ratio compares the credit limit to the balance held on credit card accounts. If you keep your balance under 10% of your credit limit, you will have the highest scores. The higher the balance, the lower your scores. So make sure the person is responsible and has the means to stay out of debt.
Keep The Account Open
An Authorized User Tradeline can only boost your credit scores if it is currently open. You want to make sure that the account owner keeps the account open even if they do not plan to use the card at all. We do encourage that they use the account and pay it off once every few months so that the bank does not automatically close the account. Keeping the account open and active is critical for your success.
Follow These Simple Rules
If you follow these simple rules, you will ensure that you have a seasoned Authorized User Tradeline that will positively benefit your credit history and improve your credit scores. If you can’t meet these requirements, ask your local bank about a secured credit card.
What is Piggybacking On An Authorized User Tradeline?
Piggybacking on an Authorized User Tradeline is a term that is typically indicative of “black hat” credit tactics. This means that they are not illegal, but they are frowned upon by Creditors and Credit Bureaus. Piggybacking is a term that typically means you are renting, leasing or buying a seasoned Authorized User Tradeline as an attempt to improve your Credit Scores. It would refer to a person who is not becoming an Authorized User on the Credit Card account of a close friend or family member. We do not recommend this method as it could result in negative credit in the future. You want to find someone who is either a family member, close friend or roommate.
Can A Seasoned Authorized User Tradeline Hurt My Credit?
Yes, if you don’t follow the rules listed above, an Authorized User Tradeline can hurt your Credit a LOT more than you think. Also, there are companies out there that are selling these types of seasoned tradelines. You NEVER want to pay for an Authorized User Tradeline, it is not only unethical, but it may be illegal in the near future.
Building your credit is similar to building a permanent structure; If you build a solid foundation, follow code, use quality planning and professionals, your structure will be there forever. If you are looking to cut corners, your structure will not be last for the long haul. Always be wise when trying to improve your credit scores. You can talk to us at CreditCEO to schedule a free consultation. We look forward to improving and maximizing your Credit Scores, legally and ethically.
