Can Authorized Users Help Increase Secured Card Limits?

Can Authorized Users Help Increase Secured Card Limits?
Can Authorized Users Help Increase Secured Card Limits?

Can Authorized Users Help Increase Secured Card Limits?

Secured credit cards require an upfront refundable security deposit that determines the credit limit. Adding authorized users with good credit can potentially help increase limits on secured accounts over time by strengthening the credit profile.

How Authorized Users Work

An authorized user is someone who gets added to your existing credit card account. They can make purchases using the card but are not financially responsible for repayment.

Any payment history on the account gets added to the authorized user’s credit reports. This helps build their credit profile even though they aren’t the primary accountholder.

Adding authorized users allows you to share access to credit responsibly with family members or others you trust.

Benefits for Credit Building

Being added as an authorized user offers benefits for establishing and rebuilding credit:

  • Gets positive payment history added to your credit reports
  • Helps increase thin credit files and short credit history
  • Allows you to demonstrate responsible usage
  • Contributes to a credit mix with revolving accounts
  • Requires no credit check or application

Over time, authorized user status can significantly strengthen your credit profile, especially for those new to credit.

Increasing Limits on Secured Cards

For secured cards, the deposit amount sets the initial credit limit approved. While authorized users don’t provide additional deposit funding, they can still potentially help raise your limit by:

  • Strengthening your credit profile with positive history
  • Increasing total available credit to lower utilization
  • Helping improve your credit score over time
  • Demonstrating responsible management of a shared line of credit
See also  Using Secured Cards to Rebuild Credit from Bankruptcy

This gradually makes issuers more comfortable increasing limits on secured accounts.

Ideal Authorized User Accounts

To maximize the credit benefits as an authorized user, look for primary accounts that have:

  • At least 12 months of positive payment history
  • High credit limits to lower overall utilization
  • Low balances maintained compared to limits
  • No recent missed or late payments
  • An accountholder with excellent credit scores 750+

Becoming an authorized user on an established account in good standing provides the largest boost to your credit.

Applying Together on Secured Cards

Another option is to apply for a new secured card together with the primary accountholder:

  • Apply as co-applicants for a joint secured card account
  • The accountholder with better credit should be listed first
  • Provide income and identification documents for both applicants
  • Funds from both can contribute to the security deposit

Joint accounts create shared responsibility. But they also lead to higher initial limits thanks to the stronger applicant’s profile.

Maintenance Requirements as Authorized User

To avoid losing your authorized user status:

  • Avoid going over the account credit limit
  • Don’t report the card lost or stolen
  • Don’t request a new card or account number
  • Don’t attempt to change the account mailing address
  • Respect any account restrictions the primary accountholder imposes

Any activity that appears suspicious could result in removal from the account.

Transitioning to Your Own Account

Once you’ve built sufficient credit history after 12-24 months as an authorized user, you can apply for your own unsecured card.

Before applying:

  • Check your credit scores meet issuer requirements
  • Review the primary accountholder’s plan for your user status
  • Reduce credit inquiries in 6 months prior to applying
  • Maintain low utilization on authorized accounts
See also  Secured credit cards that report to credit bureaus

With strong authorized user history supplementing your credit profile, approval odds for your own unsecured card improve significantly.

Considering Alternatives

Other options besides authorized user status for building credit include:

  • Secured credit cards using your own deposit funds
  • Credit builder loans repaid over fixed terms
  • Retail store credit cards with lower requirements
  • Becoming an account co-signer for added accountability

Compare alternatives to weigh pros and cons relative to your goals before pursuing authorized user status.

Maintaining Credit After Removal

If you lose authorized user status, take preventive steps to maintain your credit:

  • Check reports to confirm history removal
  • Lower reliance on authorized accounts for utilization
  • Continue responsible usage of your secured cards
  • Discuss continuing as an account co-signer instead
  • Apply for your own unsecured account if credit allows

Losing access can hurt your credit initially but is recoverable over time through diligent financial management.

Key Takeaways on Authorized Users

  • Authorized users can help strengthen your credit profile and scores
  • Improved scores may help boost limits on secured accounts
  • Apply together with primary accountholder to get higher joint limits
  • Follow requirements to maintain authorized user status
  • Use the improved credit to qualify for your own unsecured cards

When added properly, authorized user status provides a credit building shortcut. But secured cards using your own responsible payments remain the surest path.

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