Authorized User
CreditGlossary term
Definition
A person who is added to someone else's credit card account and can make purchases but is not legally responsible for paying the bill. Being added as an authorized user can help build credit because the account's payment history may appear on the authorized user's credit report. This strategy is commonly used by parents to help their children establish credit.
Related terms
- Credit Builder LoanA small loan specifically designed to help people build or rebuild their credit history, where the borrowed money is held in a savings account while you make payments. As you make on-time payments, the lender reports your positive payment history to the credit bureaus. Once the loan is fully paid off, you receive the funds, having both improved your credit and built savings.
- Payment HistoryA record of whether you have paid your credit accounts on time, which is the single most important factor in calculating your credit score. Even one late payment can significantly lower your score, and the impact increases with the severity of the delinquency. Consistent on-time payments over many years build a strong credit foundation.
- Credit UtilizationThe percentage of your available credit that you are currently using, calculated by dividing your total credit card balances by your total credit limits. It is one of the most important factors in your credit score, and experts generally recommend keeping it below 30%. Lower credit utilization signals to lenders that you manage credit responsibly and are not overextended.
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