What are Primary Accounts & Authorized Users? How do they Rebuild Credit?

If you have recently cleaned up your credit – that is, removed collections, and other negative items from your report – you might notice that your credit profile has reverted to a stage of infancy.You’re back at square one!Clean credit is one thing, but not having any credit history can hurt you almost as much as a bad score.What do you do?The next step to take is to re-establish your credit, and rebuild it from the ground up.When it comes to rebuilding credit, you need to know the difference between Primary Accounts, and Authorized Users, and how you can leverage them to build up your profile. 

What are Primary Accounts?

Primary Accounts are accounts that you directly own. These accounts have the most importance when it comes to strengthening your credit.That’s where the ACS Credit Building Program comes in. Through our program, we can help you add $8,000 – $12,000 in unsecured Primary Accounts, and these accounts will help to rebuild your credit from the get go.Even better news is that your credit score isn’t a factor when it comes to applying for these lines of credit.If you have a low score, (let’s say a 500 FICO), there are only 1 or 2 different companies out there which are going to be able to give you an unsecured line of credit.But you need high limits, and the way you get those is by having higher limits on your report in the first place.For example, when you apply for a credit card from the bank, they’re going to check out your existing accounts – and if those accounts have max limits of about $500, then the bank is only going to offer an account with a similar limit.Through our program, you’ll be able to add accounts with $1,000 – $5,000 limits to your profile, and over time, your score will shoot right up. This means, next time you go to the bank and apply for credit, they’ll offer you a much higher limit.Why are high limits so important?The higher your limits, the more your Credit Utilization Ratio decreases.Your Credit Utilization Ratio is how much of your available credit is in use.If you’re using more than 30% of your available credit, then this will negatively affect your score. Having more Primary Accounts, and higher limits, helps your Credit Utilization Ratio by giving you more available, unused credit. Having plenty of high limit Primary Accounts (that are in good standing) also shows creditors that you’re financially responsible.The re-establishment of your Primary Accounts is the most important, first step to take. If you have both a low score, and a high credit utilization ratio, then you won’t be able to get approved anywhere – and it’s going to take a long, long time for you to see your clean credit gain in score. 

What are Authorized Users?

The second thing to consider, and something our Credit Building Program also gives you access to, are Authorized Users. Becoming an Authorized User allows you to piggyback off of someone else’s account, and credit history.For example, if an Account Owner has a $10,000 limit account, with just $1,000 being used, and this account is about 5 years old, then when you add yourself as an Authorized User, your score will benefit by up to 20 points. This is because the Account Owner you’re piggybacking off of has a low Credit Utilization Ratio, and a well-aged positive payment history.You can increase your score this way by adding yourself as an Authorized Users to multiple accounts in good standing.Whilst this is a great way to get your Credit Utilization Ratio down, and your score up, it’s not going to help you at the bank. Banks don’t look at what accounts you’re an Authorized User for, and it doesn’t factor in for them when they’re looking to approve you. What banks care about are Primary Accounts, and what your total limit is.Overall, Primary Accounts are essential for re-establishing your credit, whilst Authorized Users help boost your score, and look great on your credit report.Our Credit Building Program covers both of these bases; giving you access to unsecured credit lines, and accounts in good standing. 
Want to learn more about credit building? Talk to an expert, for free.

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