Authorized User Tradelines: Great for Building Credit?

Becoming an authorized user on someone else’s credit card can be a completely legitimate way to build credit. If a family member or close friend offers you the option of being added as an authorized user to their credit card account, then feel free to take them up on it. 

But, if someone is offering to sell you access to an authorized user tradeline, beware. While the practice of selling or buying tradelines is not technically illegal, it is shady, expensive, and potentially fraudulent.

What Are Authorized User Tradelines?

An authorized user tradeline (AU tradeline) is when someone who has a credit card in their name adds you as an authorized user to their account.

Many credit card companies offer consumers the option to add an authorized user. An authorized user will get a card in their name that they can use just like any other credit card. 

But the primary cardholder is the only one liable for making payments on the account. 

When you become an authorized user on an account, all of that account history gets added to your credit reports. This is why becoming an authorized user is utilized to build credit and improve your credit score. 

Most often, this is a course of action used for children. Either to help them start building credit when they are young or as a way to give them access to emergency funds when they struggle to qualify for credit on their own. 

But anyone can be an authorized user on a credit card.

This credit piggybacking is what companies selling tradelines exploit. Since anyone can be an authorized user, why not sell the slot to a complete stranger?

Does Renting Authorized Tradelines Work?

Yes, They Work 

Yes, in theory, renting or buying tradelines from someone with good credit can help you to improve your credit score quickly. How much it will help depends on the terms of the account and your current credit history. 

For instance, a credit card account with a $10,000 credit limit that is 8 years old will have a more significant impact than an account with a $500 limit that is 1 year old.

Buying tradelines can work particularly well when used alongside other credit repair techniques. 

They’re Expensive

Renting a spot as an authorized user on someone else’s credit card is not free. 

Many of the companies that provide this service charge you a fee starting around $200 and reaching in excess of $1000 for the premium accounts — those with a high credit limit and lengthy credit history. 

And you are only getting access to this account for a short time. Rental periods are often only two months long. Once the rental period is up, the account will be listed as closed on your credit report. 

They’re Shady

Allowing a perfect stranger to be added as an authorized user on a credit card is not technically illegal for those selling or buying tradelines. 

That said, it is considered fraud by many credit card companies. 

Each credit card company sets out its terms of service, and some explicitly state selling authorized user tradelines as fraud. 

While it is not currently illegal, rumors are circulating that some states are looking at drafting laws against the practice of buying and selling tradelines.

They’re Risky

There is an inherent credit risk in letting a perfect stranger influence your credit scores like this. 

Sure, when you initially rent the credit line, everything looks good. But suppose, at any point, the primary account holder begins racking up bills or missing payments. This negative information gets added to your credit reports.

And the negative impact on the credit utilization and payment history portions of your credit could seriously damage your credit score. 

Is it really worth it to put the fate of your credit score in someone else’s hands?

They’re Not Weighted as Highly as Primary Accounts

Sure, becoming an authorized user on a credit card can help boost your credit score, but not nearly as much as an account in your name would. 

Many scoring models do not give as much weight to ‘fraudulent’ authorized user accounts. 

With the release of FICO 8 and subsequent models (9 & 10), FICO instituted a process for checking for potential ‘rented’ authorized user tradelines and dropping them from credit score calculations.

Even if the scoring model used counts an authorized user tradeline, a lender could exclude it from your application. 

So the seasoned tradeline you just purchased for $1000 and added to your credit reports might not help you at all.

Authorized User Tradeline Alternatives

Why spend hundreds of dollars to put the fate of your credit in someone else’s hands just for the chance that your credit score might improve? 

It just doesn’t seem worth the hassle or the cost. 

A better solution would be to look into legitimate credit repair and build credit by opening accounts in your own name. 

This will allow you to build credit long-term so long as you manage the credit accounts well. 

Even if you have bad credit, there are legitimate credit-building accounts that you can open, such as secured credit cards, credit builder loans, and more. Below are four of our favorite options. 

CreditStrong

CreditStrong offers a credit builder loan. This is a unique type of installment loan. 

Instead of a traditional loan where you apply and receive the loan funds directly, a credit builder loan will redirect these loan funds to a savings account to act as collateral. 

Then, as you make your payment each month, they will report these payments to the credit bureaus and thereby raise your score. Once you have completed all of your payments on the installment loan, the funds will then be released to you, plus interest.

CreditStrong offers a variety of customized loans; some geared towards building your personal savings and others with small monthly payments. 

They even have loans to help you build your business credit. These appear on your business credit reports not your consumer credit reports.

And the best part is there is no credit check.

Extra Debit Card

If you are in a situation where you have no credit, the E