One of the easiest and quickest ways to improve your credit score is by asking someone you trust to add you as an authorized user on one or more of their revolving accounts. This practice is also known as piggybacking.
But before you jump the gun, there are a few very important things to consider:
- Creditor Reporting – Does the creditor (i.e. Discover® or Capital One®) report authorized users to the three major credit bureaus? If the account is not being reported to the bureaus, there is no benefit to your score.
- Payment History – Does the primary cardholder make on time payments always on the account(s) you’re requesting to be added to. Reminder: Payment history makes up 35% of your credit score.
- Utilization – Does the primary account holder spend on the account(s) minimally? The last thing you want is to be added to an account with a high utilization rate. Be sure their utilization rate is 30% or less, preferably 10% or less.
- Age – How old is the account you’re being added to? This is not a must, but it’s definitely beneficial to be added to an aged account. The older the account, the better.
Additionally, as an authorized user you have no payment obligation. The responsibility solely falls on the primary account holder.
You can greatly benefit from piggybacking to establish or improve your credit, especially when being added to accounts that have perfect payment history, are aged and have low utilization.
