Being an authorized user on another person’s credit card can help you build a credit history if you’re young and have few or no accounts of your own. It can also help you rebuild your credit if you declared bankruptcy or if your credit scores went down for some other reason.
If you’re an authorized user, you’ll be able to use the other person’s credit line, and though the credit card will show up on your credit report, you won’t be responsible for making payments. If the card doesn’t have a high balance and the primary cardholder makes payments on time, being an authorized user can boost your credit scores.
When applying for a mortgage, however, being an authorized user may not help you. Some lenders will simply ignore a credit account on which you’re an authorized user. In some cases, being an authorized user may even work against you.
How a Mortgage Lender May View Your Authorized User Status
Even though being an authorized user can improve your credit, relatively high credit scores may not be enough to help you qualify for a mortgage. If a lender finds that your status as an authorized user has raised your credit scores, but you have little or no credit history of your own, or you have a history of late payments and other problems, you may not qualify for a loan with a competitive interest rate. You may be unable to get a mortgage at all.
The length of your credit history is one factor that influences your credit scores. If you’re relatively young and you’re an authorized user on someone else’s account, that can skew the average age of your accounts.
If you’re an authorized user on a parent’s credit card, the account may be as old as you are. Factoring the age of that account into the equation can make the average age of your accounts artificially high.
A mortgage lender will use your debt-to-income ratio to decide whether to give you a loan and, if so, for how much. If you’re an authorized user on someone else’s credit card, the lender may include the minimum payment for that card when calculating your debt-to-income ratio. That may cause your DTI ratio to be too high to get approved for the amount of money you need to buy a house. Your application may even be rejected outright.
Build Your Credit on Your Own Before You Apply for a Mortgage
A lender will look at numerous factors, including your credit scores, income, length of employment and assets. If your credit scores aren’t high enough to qualify for a home loan, work on improving your credit before you apply for a loan. Maintain a mix of credit accounts, keep your balances low and make payments on time.
