When being an authorized user is useless
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
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Dear Opening Credits,
I am trying to build good
credit. My brother made me an authorized user on his credit card, but the bank
does not report authorized users. What can I do to get them to report it? -- Melanie
As you can see, there are two essential
elements to the credit building process. The first is that you have to
regularly borrow and repay money. The second is that the lender must report all
of that activity to the credit bureaus. If they don't, no one (but you) will
know what a great job you've being doing.
It was a nice gesture of your brother
to let you join him on his credit card. As an authorized user, you have a
credit card that you can charge with anywhere it's accepted. The bank that
issued the card didn't give it to you, though, he did. You're not under any
contractual obligation to pay back whatever you spend to the creditor, so if
something goes wrong and the debt goes delinquent, they can't sue you for the
While most creditors do send
information about the account to all the cardholders' credit reports, some only
report the account owner's activity. That, too, can be great news for you,
since your credit report would be unaffected if your brother were to mess up
and fail to pay his bills.
Still, you want to establish a great
credit reputation, and with this particular card you can't. You may request
that they reconsider and send the credit bureaus the account details, but don't be surprised if they say no. If that's their policy, they'll
probably stick to it.
Frustrated? Don't be! There are other
ways to start and create a healthy credit record.
Get your own card. Even with no history
of using a credit card or taking out a loan, you may be able to get one of your
own. Check for
current offers on CreditCards.com. Some of the accounts are secured, so you'll need a bit of cash
to put down as collateral, while others are unsecured. The credit lines are
usually low, which makes sense because you're just starting out and the bank
can't be sure you're a good risk yet.
Become an authorized user on a
different account. Maybe your brother has another credit card and that issuer
does report all cardholders. If he was willing to extend the deal to you once,
maybe he'll do it again. This is called piggybacking, by the way. It's a
wonderful visual for the process. You have the luxury credit ride, while he has
to do the huffing and puffing to make sure the account remains in good
Find a co-signer. Perhaps you know of
someone who has a positive credit rating who is willing to go in on a new card
with you. In that case, that person would be a shared owner, and the two of you
would be equally responsible for it. If you do get someone to guarantee an
account, you must be extremely careful to treat it well. What you do will
certainly affect the other owner's credit history. Ruin that and you can ruin a
If you must be an authorized user or
get a co-signer, I strongly suggest that you used the shared account only long
enough to build the credit history you desire. That should take about a year of
consistent yet excellent use. Charge small items and then pay on time and in
full. After that, return to option No. 1 and declare your credit independence.
See related: Removing an authorized user from a credit card, When authorized user status works against you
Erica Sandberg is a nationally renowned personal finance authority. She’s host of several financial web shows, and a frequent guest for media outlets such as Fox, Forbes, Nightly Business Report and NPR. Erica previously was affiliated with Consumer Credit Counseling Service and was KRON-TV’s on-air credit expert. Her book, "Expecting Money: The Essential Financial Plan for New and Growing Families," was published in 2008 by Kaplan Press.
Send your question to Erica.
Published: August 7, 2013