There are several myths that keep people from adding authorized users on credit cards. Before becoming an authorized user or making someone an authorized user, you should consider the following misconceptions.
Authorized users mar your credit score
Adding authorized users won’t impact your credit score negatively. What determines how your credit score is affected is the authorized users spending habit and your ability to keep up with the bill. In a real sense, adding authorized users to your credit account gives your credit score a hike; especially if you are considering a mortgage loan.
You take part in the card payment as an authorized user
You’re not responsible for the card payment. The person who added you (the primary cardholder) pays the bill. You are authorized to make purchases with the credit card.
Your credit card status does not matter
f you are added as an authorized user, no doubt you would like an account that is old has a low balance to limit ratio and constant debt payment with at least a moderate credit score.
As a home buyer, authorized users won’t help your credit score
When looking for a mortgage, authorized users can help boost your credit score. Only a few lenders might not be comfortable with authorized users who are not directly related to you. Once an added user is a family member, they will most likely not have issues with it. If a distant friend, they will likely be wary.
You can go through a credit repair program to boost your credit score. Adding a low credit account to an old credit card will most likely repair the low credit account giving it a credit score boost especially while trying to get a loan.
Authorized users impact on your credit score slowly
On the contrary, its effect is immediate. For example, the day it reports on your account that someone is added, you have increased your credit history with more than 20 years. In a week time, the statement due date will be reported.
If you’re added by a close friend or a family member, his/her statement will be out in 3 days time. Then yours will be posted on your report the following week. Your credit score will gradually increase too.
Although these are regarded as myths, however, there are hidden truths behind them that you should understand whether you are an authorized user or a primary account holder. Authorized user relationship is a mutual relationship where both parties benefit. It boosts credit score for both the primary account holder and the added user.