business owner’s credit

When a business owner’s credit is insufficient to obtain business credit on their own, an authorized user or cosigner may be utilized for this purpose. But which is better, an authorized user or a cosigner? It depends upon your goal. Do you need to access funding, or to access a credit account and build business credit simultaneously? Is your business new? Is it lacking collateral?

business account
The benefit to this is that you can get funding using someone else’s credit if your own is lackluster. Nowadays, an authorized user doesn’t even use the account; their purpose is to assist the applicant with getting approval and improving their overall credit profile.
authorized users and cosigners

authorized user

An authorized user is an individual added to a business account (normally a credit card, tradeline, or line of credit) belonging to someone else, and thus is given authorization to use the account.

personal credit


With FICO (personal credit), 80% of the score is made up of payment history (35%), utilization (30%), and length of credit (15%), so an authorized user can experience improvements to their own personal credit, which leads to them being able to open additional accounts. Serving as an authorized user on a consumer account will not help an individual build business credit, however. The payments report to the account holder’s personal credit, and any benefits the authorized user receive will be to personal credit.

personal credit planning
tradelines caveat


Here is a caveat regarding tradelines: Businesses will sell tradelines to companies claiming they’ll be able to get accounts rapidly that report to business credit and will build the business credit score quickly. However, this really does not work because creditors will look at how long those tradelines have been in existence and will discover that you bought them from a company.


When you purchase a tradeline, you’re paying to become an authorized user on someone else’s account, known as piggybacking, which is considered a deceptive practice. It doesn’t indicate the creditworthiness of the business. You will reap no benefit from this at all because you don’t even have access to the account, and it is considered fraud.


Some companies selling tradelines use stolen identities, so by buying tradelines you could be piggybacking from someone who is unaware of this, or even a deceased individual. Lenders and credit reporting agencies know all the tricks and will scrutinize new authorized user accounts.

Dun & Bradstreet

When Dun & Bradstreet discovers you purchased a tradeline, your business credit portfolio will be flagged. You will lose whatever business credit you gained and will have to begin the credit building process over again. You will also be out the money you spent purchasing the tradelines. It is prudent to avoid tradelines altogether.

Authorized users

Authorized users in the personal credit world are perfectly legitimate, however. Someone with great credit can allow an authorized user to improve their own personal credit score. For example, a parent with good established credit can allow their young adult child to serve as an authorized user, and the child will benefit from the parent’s payment history, length of credit, and credit utilization.
Cosigner or Guarantor


A cosigner, or guarantor, is an individual who signs on to a credit account they do not own, thereby essentially agreeing to pay the debt if the owner does not. A business cosigner is typically associated with the business.

A cosigner helps a business owner to get a business credit card or line of credit for which they would not otherwise qualify, because the lender is assured that the cosigner will pay if the business owner doesn’t. Cosigners simultaneously allow a business owner to get funding and build personal credit. However, this will not help build business credit unless that account reports to business credit reporting agencies.

utilizing a cosigner

The practice of utilizing a cosigner should only be a steppingstone for business credit building. If the account reports to business credit reporting agencies in your business’s name, then your business credit score will benefit. In this way, a cosigner is a legitimate means to attain approval for business accounts. This practice is NOT considered deceptive. It can help build a strong business credit profile, thereby placing you in a better position to get funding without a personal guarantee, eliminating the future need for a cosigner altogether. At this point, the business will be able to obtain funding on its own merits and creditworthiness.
Valid Alternative is to use Credit Partners

valid alternative

A valid alternative is to use credit partners, business partners possessing strong credit which allow a business to get credit approvals based upon their creditworthiness. Often, these report to business credit reporting agencies, and the business receives the benefit.
There are benefits to utilizing authorized users and cosigners to assist with obtaining business or personal credit. Which you choose ultimately depends on the goals you endeavor to achieve.

business partners right alternative