After filing for bankruptcy, one of the most important things to do is to rebuild your credit. You need to raise your credit score, because it will not raise itself. There are a number of ways to rebuild your credit, but one common way is to become an authorized user on someone else’s credit card.
As an authorized user, you will receive a credit card from the account of someone you trust. You will be able to make purchases and use the card just like the primary card owner. The biggest difference between you and the primary account holder is that you are not responsible for the debt on that card. There might be some privileges that you cannot have on the account such as adding new cards or changing spending limits. Ultimately, however, the responsibility of the card lays with the primary account holder. They are legally responsible for any debt you run up on the card.
It is a big decision when asking someone if you can be an authorized user on their account. You must ensure that the person pays their bills on time and keeps their credit utilization low. Essentially, you want to:
- Ask someone you know and trust
- Ensure the person has a good credit score
- Be sure that the person has a long and strong credit history
I cannot emphasize enough how important it is to ensure that the person has good credit and is reliable. If they miss just one payment, it could have a very negative impact on your credit.
Being an authorized user is not to be confused with having a joint account. A joint account holder gives you more responsibility. You are legally responsible for paying off any debts accumulated in an account. Joint account holders are commonly created between spouses. A common scenario for authorized users are parents who want to help build their child’s credit.
After filing for bankruptcy, it is imperative that you rebuild your credit. One easy way to do this is by becoming an authorized user on someone you trust’s account.