Want a fast track way to build your credit profile without applying for a loan or credit card? Here’s one strategy that might surprise you: becoming an authorized user. Known as holding an add-on credit card, this method provides significant benefits for those new to credit or seeking to repair past financial issues.
In this blog, you’ll learn how being an authorized user can help your credit score, who benefits most, how it works, and the steps to get started.
What is an Authorized User (Add-on Cardholder)?
In the Indian financial system, an authorized user typically refers to an add-on cardholder—someone who gets access to a credit card that’s linked to a primary account holder, usually a family member.
Here’s how it works:
• You get a physical credit card with your name on it
• The card shares the same credit limit as the main card
• All purchases are billed to the primary cardholder
• Some Indian banks report your usage to credit bureaus, which can help improve your credit score
Note: Always confirm with the issuing bank if your activity as an authorized user will be reported to credit bureaus. This step is key to unlocking the credit-building benefits.
How Being an Authorized User Can Improve Your Credit Score
Becoming an authorized user can give a notable boost to your credit score when done strategically. Here’s how this approach can improve your creditworthiness across the key factors that determine your score:
1. Builds Credit History Through Payment History
Becoming an authorized user on someone’s credit card helps you build credit quickly. The card’s full history, including years of on-time payments, shows up on your credit report, even if you just joined. Since payment history makes up 35% of your credit score, this can give your score a substantial boost.
When the primary cardholder pays bills on time, it positively influences your profile, adding trustworthiness to your credit persona. This is a fast way for someone with no credit to start strong, as long as the main cardholder has managed the account responsibly.
2. Extends Your Credit History Length
When you become an authorized user on an established account, you may inherit its entire account history. If the primary cardholder has maintained the account for a decade, that account age becomes part of your credit profile, potentially increasing your average account age significantly and providing an immediate boost to this scoring factor.
Credit history length accounts for 15% of your credit score, making this benefit particularly valuable for those just starting their credit journey.
3. Reduces Your Credit Utilization Rate
If the shared card has a high limit and low balance, it lowers your credit utilization, which helps boost your credit score as an authorized user.
Credit utilization, the percentage of available credit you’re using, represents about 30% of your score. Credit scoring systems evaluate both individual card utilization and your overall utilization across all revolving accounts. Keeping utilization below 30% is crucial, with rates below 10% being ideal for optimal scores.
4. Adds to Your Credit Mix
Having a mix of credit types like loans and credit cards improves your creditworthiness. An authorized user card contributes to this diversity.
If you only have installment loans, becoming an authorized user on a credit card introduces revolving credit to your profile. This diversification can provide a modest but meaningful improvement to your credit score, especially for those with limited credit types.
Who Gains the Most from Authorized User Benefits?
This approach works best for:
• Young professionals and students starting with no credit history
• Homemakers looking to build a financial identity
• Salaried individuals who haven’t yet qualified for their card
• People with damaged scores aiming for a fresh start
For all these groups, authorized user status offers a valuable boost in the development of their financial profile.
Choosing the Right Primary Cardholder
Since your credit growth depends on someone else’s financial behavior, choose carefully. The ideal primary cardholder should:• Pay bills on time without fail
• Keep credit utilization below 30%
• Have a long-standing credit account
• Use a bank that reports add-on cardholder activity
• Trust you enough to share their account
This relationship is what makes the authorized user credit score boost work—or fail.
Potential Pitfalls to Watch Out For
Despite the benefits, this strategy is not foolproof. Here are some limitations:
No Reporting = No Boost
If the bank doesn’t report the add-on activity, your credit score won’t benefit.
Late Payments = Bad News
If the primary cardholder misses payments, it could hurt your credit too.
No Control
You don’t get to manage limits or repayment—you’re at the mercy of the main user.
So, while becoming an authorized user can help your credit score, it only works if the cardholder maintains a good record.
Tips for Maximizing Your Credit Score Boost
- Keep your spending below 30% of the shared credit limit
- Communicate monthly with the cardholder to track dues
- Don’t miss payments even if you’re not legally liable
- Use for predictable expenses only—no impulse purchases
- Move to your own card after 6–12 months to start building independent credit
Conclusion
Being an authorized user through an add-on card is a smart, accessible way to start building your credit score, especially for those who are new to the credit game or looking to recover lost ground. When used wisely, it offers powerful benefits like better credit history, improved utilization, and faster score growth.
Just remember, this is a partnership. Your credit success hinges on how responsibly both you and the primary cardholder manage the account. Choose your primary cardholder wisely, communicate regularly, and use this opportunity as a stepping stone to building your independent credit profile.
Frequently Asked Questions (FAQs)
1. What is an authorized user or add-on cardholder in India?
An authorized user, often referred to as an add-on cardholder, is someone who is issued a secondary credit card linked to a primary cardholder’s account.
2. Are authorized users responsible for paying the credit card bill?
Generally, only the primary cardholder is legally obligated to pay the credit card bill. That said, arrangements can vary—some primary cardholders may request that authorized users cover their share of the charges.
3. How can being an authorized user help improve my credit score?
If the issuing bank reports your activity to credit bureaus, you can benefit from the primary cardholder’s on-time payments, long credit history, low credit utilization, and account mix. These factors contribute significantly to your credit score.
4. How quickly can an authorized user start building credit?
If the credit card issuer reports authorized user activity to the credit bureaus, the account usually appears on the user’s credit report within a few months, potentially helping to build credit during that time.
5. What are the risks of becoming an authorized user?
If the primary cardholder misses payments, keeps a high balance, or mismanages the account, your credit score could suffer. Also, you have no control over account management or repayment decisions.
6. How long should I remain an authorized user?
For most, 6 to 12 months is enough to gain a positive credit impact. After that, it is wise to apply for your own credit card to build an independent credit profile.
7. Does spending as an authorized user affect the main cardholder’s credit?
Yes. Any charges you make are added to their account and can affect their utilization and payment obligations. Always spend responsibly and communicate to avoid issues.
