Can Someone With Good Credit Help Someone With Bad Credit?

Having a bad credit score can impact many important financial decisions in your life

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Getting a good credit score is difficult and requires a lot of effort, but if you have little or no credit card history, people with a good credit score can help you tremendously.

People with bad credit scores can improve them by using credit repair in Dallas, Texas, but it’s a much smarter and quicker strategy to become an authorized user on the credit card of someone with a good score. However, this process has benefits and risks for both parties, so let's take a deeper look. 

Authorized Users

To boost your credit score, you can piggyback on someone with a good credit score. In credit card piggybacking, someone obtains the status of an authorized user on someone else's credit card. The strategy works best if the primary user has a long history of making payments on time and a credit card with a high limit. 

Basically, the authorized user gets the benefit of the good credit history of the primary account holder, and the history of the primary account holder is added to their credit card history. Once you’re an authorized user, the account holder will get a credit card with your name on it, and you can make purchases on the primary cardholder's account. However, the primary cardholder is responsible for paying charges on the account—the authorized user is not accountable to the credit card company. Authorized users have certain limitations and don't enjoy certain perks that a primary cardholder is entitled to, including awards, increasing the credit line, and adding or removing other authorized users.  

Piggyback Credit for Bad Credit History

If someone already has a bad credit history, becoming an authorized user will have little effect. The credit of someone who has had to go through repossession of a property, for example, will likely be unaffected by becoming an authorized user.

If you’re in danger of repossession, voluntary repo does hurt credit, but much less than the alternative—check out our recent article to learn how you can reduce damage to your credit score. 

Pros for Primary Account Holders

Piggyback credit comes with risks and benefits for both parties. If you’re a primary account holder, here are the upsides:

  • You’re helping an authorized user build a solid credit foundation.

  • You’re empowering an authorized user to access a credit card.

  • You can keep an inactive account active.

  • You can enjoy rewards from the purchasing history of the authorized users.

Cons for Primary Account Holders

Here are some of the risks:

  • The primary account holder is responsible for paying the card balance.

  • You may have to pay additional annual charges for adding authorized users to your card.

  • Bad spending behavior of an authorized user or mismanagement of the account can negatively affect your credit score.

Benefits and Risks for Authorized Users

You don't need to apply for your own card, and you can build a good credit history. Ensure the card-issuing company reports the authorized user activities to credit bureaus–if they don't, it won't add any benefit to your credit score. 

You must use the card carefully and communicate with the primary cardholder to ensure your spending habits allow them to make payments on time. Missed payments or too much debt on a card by either the primary cardholder or authorized users will hurt the credit scores of all parties. 

To turn into an authorized user, ask somebody you trust to add you as an authorized user. Ensure the primary cardholder: 

  • Has an old account

  • Has an excellent payment record

  • Spends less than 30% of the credit limit

In Summary

If piggyback credit is not for you, there is nothing to worry about—people with a bad credit score or no credit score can build solid habits on their own. Paying your bills on time, not applying for multiple credit cards, and spending below 30% of your credit card limit can get you a long way. However, bouncing back from a bad credit score can be difficult. If you’re in Texas and have wondered how much credit repair is per month in Dallas, experts at Phenix Group can help you repair your credit score in no time, and in a way that will suit your budget.

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