How Becoming an Authorized User Can Boost Your Credit Score
Building credit can be tough when you’re just starting out. Becoming an authorized user on someone else’s credit card account is one way to build good credit and improve your credit score.
What Is an Authorized User on a Credit Card?
An authorized user is someone who has been given permission by the primary cardholder to make purchases on their credit card account.
An authorized user can get their own credit card with their name on it, but the primary cardholder is ultimately responsible for all charges made on the account.
While authorized users can make purchases with the card, they can’t make certain changes to the account itself, such as increasing the credit limit.
There’s no credit check required to become an authorized user on someone else’s account. That’s why many parents add their child as an authorized user.
Adding an authorized user can also make it easier for couples and families to accumulate credit card travel points and cash back more quickly.
The primary cardholder must make timely payments to avoid accumulating debt and damaging their credit.
How Does Being an Authorized User Impact Your Credit?
If the primary cardholder has a good credit history and consistently pays their bills on time, being an authorized user on their account can help build your own history and boost your credit score.
As an authorized user, you’re essentially piggy-backing off their good credit habits.
That’s because the credit history and payment behavior of the primary cardholder also appears on the authorized user’s credit report.
However, your credit score can suffer if the primary account holder makes late payments or uses a large percentage of their available credit, known as their credit utilization ratio.
If you have no credit history, being an authorized user can have a bigger positive impact on your credit score than it would for someone with an established credit history or poor credit, according to Experian, a credit reporting bureau.
Most credit card companies report credit activity for authorized users to the three major credit bureaus. Make sure the card issuer reports this information. Otherwise, being added to the account won’t improve your credit score.
Responsibilities of an Authorized User
Authorized users can make purchases on the account, but they aren’t responsible for paying the credit card bill.
If you become an authorized user, it’s important to work out a payment plan with the primary cardholder.
The primary cardholder may choose to share their account login information with you, so you can login and pay your share of the credit card bill each month.
Or you can agree to send the primary cardholder your portion of the bill each month via Venmo or Cash App.
Some credit cards also let the primary cardholder set spending limits for authorized users. At the end of the day though, it’s the primary cardholder who bears responsibility for paying the account balance.
How to Add or Become an Authorized User on a Credit Card
The primary card holder has to add an authorized user to the account. Almost anyone can be added as an authorized user, including a child, a spouse, a family member or a close friend. Just double check the credit card company’s age requirements first.
To add someone as an authorized user, the primary cardholder typically needs to follow these steps:
- Contact the credit card issuer: The primary cardholder can call the customer service number on the back of their credit card or visit the issuer’s website to add an authorized user.
- Provide information: The primary cardholder will need to provide the authorized user’s full name, date of birth and Social Security number.
- Agree to the terms: The primary cardholder needs to agree to certain terms and conditions, including accepting responsibility for any charges made by the authorized user.
- Receive and activate the new card: The credit card company will usually send a new credit card to the primary account holder’s address.
Just because a second card arrives in the mail doesn’t mean you’re required to use it, or even activate it.
So long as the primary cardholder maintains good credit habits and on-time payments, the authorized user can benefit from being on the account — without spending money.
How to Remove Someone as an Authorized User
Authorized users might be able to remove themselves from an account. Otherwise, the primary cardholder must contact the credit card company.
Removing someone as an authorized user is a pretty quick process, and should only take a few minutes.
It’s important to note that removing someone from a credit card account doesn’t cancel any outstanding balances that the authorized user made. The primary cardholder is still responsible for paying off any debts that were incurred while the other person was still on the account.
Removing an authorized user can also hurt that person’s credit score, especially if they have a short credit history or they don’t have any other credit accounts in their name.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder. She focuses on retirement, credit cards, investing and taxes.