If you’re looking to establish credit history, rebuild your credit, or raise your score, being added to someone else’s credit card as an authorized user is a popular way to give your score a boost. In order to become an authorized user, you need a friend or family member to agree to add you as an authorized user on their credit card. Becoming an authorized user can help to improve your credit, but it also comes with added responsibility.
What is an authorized user?
An authorized user is someone authorized to use another person’s credit account. When you become an authorized user, you receive a credit card that is connected to the primary cardholder’s line of credit. Any purchases you make on your card become part of the primary cardholder’s credit card balance and the primary cardholder is responsible for making on-time payments against that balance.
Becoming an authorized user can help borrowers with poor credit or short credit history start building a positive credit history. It can also be a convenient way for families and members of the same household to streamline spending and payments.
Pros and cons of being an authorized user
Here are some of the main benefits of becoming an authorized user:
- May improve your score: Helps to boost your credit score through a history of on-time payments and responsible borrowing.
- Convenient for families: Adding a partner or spouse, parent, or child as an authorized user can give them access to your line of credit and streamline family expenses.
- Boosted rewards potential: With multiple people spending on the same credit account, you can potentially rack up more credit card rewards.
- Free: There’s usually no additional charge to add an authorized user to an account.
There are some downsides, though, particularly for the primary cardholder:
- Could hurt cardholder’s credit: Adding an authorized user doesn’t necessarily negatively impact the cardholder’s credit, but it could hurt their score if an authorized user racks up a balance and isn’t able to pay it back.
- Could hurt authorized user’s credit: Likewise, the spending habits of the cardholder also reflect on an authorized user. Poor payment habits and unwise spending by the account holder could have a negative impact on an authorized user’s credit.
- Cardholder is responsible for the balance: Whatever the authorized user spends, the cardholder is responsible for paying back.
- Less control over spending: With two people using the same account to make purchases, balances can add up fast.
What authorized users can and can’t do
Authorized users can use their credit card to make purchases. The card may also show up on their credit report and has the potential to help boost their score. (It’s important to check whether the issuer will report data to the bureaus for the authorized user.)
However, there are some things that an authorized user can’t do. The authorized user cannot make changes to the account, like requesting a credit limit increase or adding other authorized users. When it comes to spending power, the primary cardholder can set a limit on the amount of money an authorized user is allowed to spend. The primary cardholder is also the only one responsible for paying off the balance on the card.
How being an authorized user affects your credit score
Not all credit issuers report authorized users to the three credit bureaus, so your authorized user account might not become part of your credit history. However, in most cases, your authorized user account will show up on your report and affect your score.
How significant an impact becoming an authorized user will have on your credit depends on your current score and the primary cardholder’s borrowing behavior. For instance, if you have several late or missed payments on your credit report, being added as an authorized user to a card where the primary cardholder makes on-time payments each month could boost your score. Similarly, being added as an authorized user could help you to decrease your credit utilization and improve the age and mix of your accounts.
How to add an authorized user
The process to add an authorized user depends on the specific credit card. In some cases, the primary cardholder may be able to add an authorized user online or through their bank’s mobile app. In other cases, they may have to give the bank a call. It’s also possible to add an authorized user when you open a new credit card account. You’ll need to provide information including the user’s name, birthday, and Social Security number.
How to remove an authorized user
You can usually remove an authorized user online or over the phone. Once you complete the process, it’s a good idea to send your credit card issuer a certified letter confirming the agreement to remove the authorized user from your account. You should also collect the credit card from the authorized user to ensure they can no longer make charges against your credit account.
Tips for building good credit
Becoming an authorized user is just one way to raise your credit score. Other strategies for building good credit include:
- Making on-time payments: Late or missed payments are one of the biggest factors that negatively affect your score, so it’s important to make on-time payments each month to build good credit.
- Reduce your credit utilization: Your credit utilization, or the percentage of total credit you’re using, also has a big impact on your score. Try to keep balances to a minimum and pay down debt when possible.
- Keep old accounts open: If you have old credit cards that you no longer use, you should consider keeping them open, since the age of your accounts can affect your score.
- Consider a secured card: If you’re just starting out or are rebuilding your credit after tough financial times, a secured credit card is a good way to start building up your score. Secured cards require an initial deposit, and are easier to qualify for than traditional credit cards.
- Try Experian Boost: Utility bills paid by check or debit card aren’t usually included as part of your credit score. But if you pay your bills on time each month, you can add them to your credit report using Experian Boost.
- Be patient: Building up your credit score takes time. Even if you’re making all the right financial moves, you may not see immediate results. Be patient, and eventually your score will reflect all of your hard work.