One of the best ways to improve your credit is to dispute errors contained on your credit report. You can file a dispute for free online at the credit bureau's website. Once your report is free of errors, you can begin to focus on obtaining positive tradelines. If you have a relative or spouse with good credit, that person can add you to their credit card as an authorized user by contacting the card issuer and including you on the account; however, you should be aware of how your status as an authorized user will impact your credit score.
FICO Credit Scores
If you are an authorized user on a credit card, the credit history of that card will appear on your credit report. FICO will include this data in the calculation of your credit score. If the card has a positive payment history, such history will help to improve your score. Likewise, if the card has a good credit utilization ratio, meaning there's more available credit on the card than debt, this will also increase your score. Payment history and credit utilization account for the two largest factors in the calculation of your FICO score - 35 percent and 30 percent, respectively.
Consequences
As an authorized user, your will receive both the positive benefits and the negative consequences. If the card holder makes a late payment, that will appear on your credit report as well as his. As a result, your credit score will drop by as much as 110 points, according to MSN Money. Also, if the card holder goes over the credit limit and maxes out the credit card, your score could drop anywhere from 10 to 45 points.
Considerations
Authorized users are not responsible for the debt accumulated on the credit card. They are also not allowed to access the card holder's account to make payments. If you suspect that you are an authorized user on a card and the card holder is headed for financial difficulty, make sure the card holder removes you as an authorized user as soon as possible, preferably before any damaging data appears on your report. Any negative data from the card that appears on your report before you are removed can remain on your credit report for up to seven years. Credit bureaus are required to remove errors, but they are not required to remove valid information, even if the information is negative.
Prevention/Solution
One tool for building your credit and improving your credit score is to apply for a secured credit card. Secured credit cards are secured by a savings account or certificate of deposit with a bank. The bank in turn issues a credit card with a limit equal to the amount of the deposit. If you have a secured credit card in your name, you are in a better position to control what happens with that card and protect your credit. As an authorized user, you are at the mercy of someone else's financial decision making.
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