Many people will, at one time, need credit to help cover the cost of something. However, what happens if you want to apply for a credit card but don’t meet requirements? A traditional secured credit card can help you build your credit history, but requires a deposit that is used as collateral. However, you might be wondering how to get a credit card with no deposit. Fortunately, there are other options — like becoming an authorized user on an existing card — available to aid people who need to get credit.
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Become an Authorized User on Someone Else’s Credit Card
Becoming an authorized user on a credit card account allows people who may not be able to qualify for a card by themselves to use someone else’s credit card as if it were their own. Authorized users do not have all the same account capabilities of a primary account holder, but as far as general use is concerned, it’s as if the card is theirs.
Benefits
One of the main benefits of being an authorized user is that if the primary account holder has a good history of use with the card, the authorized user may reap some of the rewards on their own credit. Many — but not all — issuers report authorized user activity to the credit bureaus, which means that you can essentially piggyback off a primary account holder’s credit history for a given card.
Drawbacks
On the other hand, if a primary account holder has missed payments on the card or is holding a high balance — both negative impacts to credit — an individual risks damaging their score by becoming an authorized user.
Similarly, if an authorized user mishandles the credit card, racking up large balances they can’t afford to pay off, the primary account holder will be held responsible. This responsibility may make it difficult to find someone who trusts you as an authorized user on their account.
Establishing Good Habits
Becoming an authorized user on another credit card to improve your credit score only works if it’s accompanied by good habits.
- Most importantly, always remember to pay your credit card bill on time and in full every month. (Payment history can make up 35% of your credit score.)
- Other key factors to credit scoring include minimizing the balances you hold on cards, and maximizing the average age of accounts by not closing older credit accounts.
- The mix of accounts (auto loans vs. credit cards vs. mortgages) can also impact your score.
Educating yourself on what type of behavior leads to a higher credit score should come before completing any applications. With a bit of preparation, and a commitment to good habits, you can find a credit card with no deposit that can help you create a brighter financial future.
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