What Are authorized user tradelines? How do they work?
Think of authorized user tradelines as piggybacking. In its purest definition, it means someone adds you as a user to their credit card or line of credit. The account holder’s credit account history reports to your credit report, but you do not have the financial obligation to pay on the account.
The Authorized User gets a card with their name on it sent to the account holder to either give to the Authorized User to allow them to use the card or to set aside and allow it to report on the credit report only. If you noticed I mentioned the account holder’s credit history (on that account) reports to the Authorized User’s credit report. This means everything about that account reports including age and past credit history. We will show you of the importance of this as we get deeper in this article.
How to add authorized users & how to become an authorized user
Adding Authorized Users to your account is dependent upon the individual card company’s terms and process. Not all card companies allow Authorized Users or will report on the Authorized User’s credit report. Check with the issuer of the card, or the cardmember agreement. There are a couple ways to become an Authorized User. First, you could ask family or friends. You can also become an Authorized User through companies who allow you to purchase/rent Authorized User Tradelines that report for a short period time called tradeline brokers. You can choose from a variety of tradelines, however the best tradelines that are the oldest cards, barely utilized, and largest balance tend to be the most expensive. On our website we have a credit building page with a couple brokers we strongly recommend.
How can authorized user tradelines help?
Authorized User Tradelines can help in a variety of situations. For a young adult just starting out, this is a kickstart for them. As you know not having any credit can be worse than having bad credit. Lenders are usually hesitant to extend credit to someone with
no credit at all or a very thin credit file. Authorized User Tradelines also help improve the quality of credit card offers. In example, it may qualify you for a $5,000 credit card vs a $300 credit card. With a good Authorized User Account, it can lower your credit utilization, increase your credit file age, which will boost your credit score. They are also a powerful tool when combined with the credit repair process. Remember the balance scale from Part 1 of this series? Credit repair can help get the negative items off the bad side of the scale that’s dragging your score down while using Authorized User accounts to add to the good side of the scale that boosts, in addition to the ability to obtain better credit offers also adding to the good side of the scale, you have an unstoppable combination.
What to look for when considering authorized user tradelines
- Consider Authorized User Tradelines That Compliment Your Credit Profile Needs – If you have no credit, or a young credit profile, you may want to consider accounts that are older. Also, if you have a bunch of maxed out credit cards, you may want to consider an account that has a large credit limit, with super low utilization.
- Only Use An Authorized User Account For As Long As You Need It – Since the card company is going to report both the good and the bad, only use the account to accomplish what you need to do. So if you have no credit and just getting started, use the account until you have obtained your own credit lines, same goes for those seeking better credit lines or those who are rebuilding their credit. People’s circumstances change, you just never know when they might fall on hard times and live off that card (charging it up), or begin missing payments.
- If You Are Using Friends, Family, Or A Broker, Remember: The Card Owner’s Credit History Reports On Your Credit Too – I can’t stress this enough, CHOOSE WISELY the data furnisher is going to report both the good and the bad. Ensure there are no past delinquencies, or ensure that the card is maintained while you are an Authorized User. The last thing you want is negative information reporting on your credit.
- Only Use A Vetted Tradeline Broker – Unfortunately, scammers do exist. Know who you are buying the tradeline from before you commit. We have vetted 2 brokers for our clients GCL Credit and Tradeline Supply Company. Anyone who sells something is going to paint you a pretty picture, just make sure they deliver the pretty picture they promised you.
Tradeline Brokers, we recommend at credit wellness solutions
There are many tradeline brokers out there. Finding the right one for you is very important. As mentioned above, there are scammers out there, so be careful when selecting your source for a tradeline. Below are our recommendations but know there are others. Just read reviews and do your homework.
GCL CREDIT
Alonzo Tisdale of GCL Credit is my go-to source for Authorized User and Primaries (more on that in a bit). Alonzo has top notch products. I would put GCL up against any tradeline broker for quality tradelines and pricing. They also do business credit! Click Here to fill out a contact request form, and we will get you setup with GCL Credit.
Tradeline Supply Company
We also recommend Tradeline Supply Company as a good resource for Authorized User Tradelines. They are considered one of the most trusted sources in the industry. Another thing I find really cool about Tradeline Supply is their YouTube Channel where the main focus of the content is credit education, rather than marketing their service. They have a series called “Credit Countdown” where credit industry expert, John Ulzheimer, who has over 30 years working directly in the credit industry (Equifax and FICO). His credit industry insider insights will teach you anything you wanted or didn’t want to know about credit.
Leveraging Tradelines For mortgage approval
Some in my industry will argue that Authorized User Tradelines will not help you with mortgage approval. However, I beg to differ. I have relationships with several in the mortgage lending industry that are getting
approvals with Authorized User Accounts on their client’s credit reports. The logic behind that is the older FICO scoring models commonly used for mortgage lending do not factor in Authorized Users. However, mortgage lenders have a lot of tools at their disposal where they may not be using those older FICO models as it is Fannie and Freddie loans that those scoreing models are required.
The use of “primaries” for mortgage approval
I mentioned primaries above when speaking of my friends at GCL Credit. Primaries are accounts that report to your credit similar to Authorized User Tradelines, except these accounts are Auto Loans, Mortgages, or other loans. These accounts report as if you are the primary party on the loan, with a full 2-year positive payment history, and showing nearly paid off so that it doesn’t affect your debt/income ratio. These accounts report for 1 year after purchase. Primaries are one of our biggest tools in our tool bag for someone with a very thin credit profile to help push the client to the finish line and get the mortgage approval they need. Although primaries are pretty costly, these accounts help achieve the desired results in a very short period of time.
Final Thoughts
Authorized User Tradelines, and Primary Accounts can be great assets to build a healthy credit profile if properly applied and chosen wisely. Just remember, everything that happens with the account you are an Authorized User on will report on your credit, both the good and the bad. When choosing a friend, family member, or even a broker BE VERY CAREFUL. Otherwise, this is a great tool
to accomplish all of your credit goals. For your children that are coming of age, you would be doing them a great service by adding them as an Authorized User to teach them responsible use of credit (if you elect to give them the card), or by letting the credit report to their credit. No matter the situation we can help you employ these great tools to achieve maximum success . Schedule a FREE Consultation today, and let us help you not only fix your credit, but build your credit into the best credit profile it can possibly be.
