If you’re looking to become an authorized user on someone else’s credit card, there are many things that you need to consider. Of course, doing it the RIGHT way can be a very valuable strategy if you want to build credit. However, not everyone that becomes an authorized user on an account will benefit from it in the same way.
In some cases, becoming an authorized user on someone’s account won’t have any impact at all, positive or negative. There are also cases in which becoming an authorized user on someone else’s account could have a negative impact on your score, which is what we want to help you avoid.
In this article, we want to go over why you should avoid becoming an authorized user on a card that is heavily utilized.
The Importance Of Avoiding Heavily-Utilized Cards
Revolving Utilization, which we often refer to as “credit utilization ratio,” is one of the most important factors when it comes to your FICO score, weighing in at around 30%. The lower the credit utilization ratio for your score, the better it will be. If you end up utilizing too much of the credit that you have available, you could end up becoming too much of a financial risk for lenders to want to give you money.
When it comes to positively impacting your credit score, you want to make sure your credit utilization is as low as possible.
There are many consumers that seek out authorized user tradelines that have high credit limits. However, if these accounts are paired with high utilization ratios, becoming an authorized user on them could actually end up being quite harmful. In essence, a high utilization ratio could end up increasing your revolving utilization ratio, rather than bringing it down.
In an ideal world, you become an authorized user on someone’s account that has a high credit limit, though regardless of that credit limit on that credit card, the utilization ratio has been kept very low. In doing so, you can avoid any negative impacts.
Final Thoughts – Picking The Right Account For Becoming an Authorized User
Understanding credit utilization ratio is incredibly important if you want to potentially boost your credit score as an authorized user.
If you’re looking to get tradelines that boost your credit score, you will need to make sure that you manage all of your accounts responsibly and that your utilization ratios are low. When you become an authorized user on an account with a good credit history, you can improve your own credit.
Here at Boost Credit 101, we specialize in helping people like you potentially raise their credit scores with high-quality tradelines. Make sure to reach out to us with any further questions.
Your finances are a big part of your life and can make or break certain situations. When you’re ready to take the next step in your tradeline journey, make sure to get in contact with us!