credit cards

6 ways to deal with limited or no credit

Become an authorized user
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Become an authorized user

This strategy can be chancy for the authorized user and the primary cardholder.

In the perfect scenario, the authorized user gets charging privileges on another person's credit card, stays within whatever limits the cardholder sets and the cardholder's good payment history for that account appears on the authorized user's credit record.

The gamble if you're the authorized user: If the account holder misses payments, goes into collections or declares bankruptcy, that bad behavior can also land on your credit report.

Before you attempt this arrangement, find out from the issuer if you have the power to remove yourself from the account. Also, ask the issuer what would happen to account information -- good or bad -- that's already on your report if you're no longer an authorized user.

If you become an authorized user, monitor your credit report regularly to ensure the account is reporting and paid on time.

The gamble if you're the primary account holder: The authorized user could max out the card and leave you with the bill.

One possible solution: If you want to add an authorized user, don't give that person a card, says Sherry.


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