1. No Direct Impact on Primary Credit Score:
As an authorized user, your credit history doesn't directly contribute to your primary credit score. Your credit score is based on your own credit accounts and financial behavior.
2. Potential Benefits for Credit Building:
Being an authorized user on a well-managed credit card can positively affect your credit history if the primary cardholder pays their bills on time and maintains a low credit utilization ratio.
3. Credit Bureaus May Not Report Authorized User Activity:
Some credit bureaus, like Equifax, may not include authorized user accounts on your credit report unless you also have a primary credit account with them. However, bureaus like TransUnion and Experian may report authorized user activity.
4. Inaccurate or Incomplete Information:
In some cases, authorized user accounts may contain incorrect or incomplete information, such as incorrect dates, credit limits, or payment history. This could potentially impact your credit score if not addressed.
5. Lower Credit Limit:
As an authorized user, you might have a lower credit limit compared to primary cardholders. This can affect your credit utilization ratio, which is a key factor in determining your credit score.
6. Lack of Control:
As an authorized user, you don't have control over the primary cardholder's financial decisions. If they miss payments or overspend, it could negatively affect your credit score.
7. Establishing Your Primary Credit History:
While being an authorized user can be helpful, establishing your own primary credit accounts, such as a credit builder loan or secured credit card, is recommended to build a robust credit history.
8. Joint Liability for Authorized Purchases:
As an authorized user, you may be jointly responsible for any unpaid charges made using that card. This could hurt your credit history if the primary cardholder defaults on the account.
9. Limited Credit Mix:
Having only authorized user accounts may limit the diversity of your credit mix. A mix of different types of credit accounts, such as credit cards, student loans, and auto loans, can positively impact your credit score.
10. Communication with Lenders:
When applying for loans in the future, lenders might ask about your authorized user accounts. Be prepared to explain these accounts and emphasize that you're working on building your own primary credit history.
In summary, while being an authorized user can be a stepping stone to building credit, it's important to understand the potential limitations and actively work on establishing your own primary credit accounts to obtain a comprehensive and favorable credit history.