Authorized users: Everything you need to know

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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

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 or not the issuer will report data to the bureaus for the authorized user.

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.

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.

How significant the impact of becoming an authorized user is 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.

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.

Here are some of the cons of adding an authorized user, 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.

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, date of birth 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.

The bottom line

Becoming an authorized user is just one way to raise your credit score but it requires a certain level of trust from the primary cardholder on the account. The liability falls entirely on the primary cardholder because they are responsible for the payments at the end of each billing cycle. It is important to practice good financial habits as an authorized user. You should not go on a spending spree without a clear plan with the primary cardholder to pay off your balance on time and in full each month.