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If you’re building or rebuilding credit, you may get a boost by becoming an authorized user on someone else’s credit card.
As an authorized user, you’ll receive a credit card with your name on it and the primary cardholder’s account number. You can use the card at any time, but the bills will go to the primary cardholder. Becoming an authorized user helps you establish good credit, since on-time payments may be reported to the credit bureaus under your name. It also provides you with the convenience of a credit card, even if you couldn’t get one on your own.
A lot of people adopt this as a method to build credit. Parents may add children as authorized users to help them start building credit. Or, sometimes, one partner in a relationship will have a better credit score than the other and, as an authorized user, the partner with less-than-stellar credit can still enjoy all the benefits of a high-end rewards card. An authorized user doesn’t even have to be a relative. A cardholder can name anyone they trust as an authorized user.
But there also may come a time when you no longer need or benefit from an authorized user status.
How to remove an authorized user
The process of removing an authorized user is very simple.
If you are the cardholder
To remove an authorized user, call the number on the back of your credit card to reach the card issuer’s customer service number and request the authorized user to be removed from the account. Some credit card issuers may even allow you to remove an authorized user online or via the company’s mobile app.
You may also opt to send a letter via certified mail that references the customer service call and details — the name of the user being removed, last four digits of the account number and date of the call. This could help ensure that the action has been completed or give you a point of recourse with the credit card issuer if it isn’t.
The process to remove an authorized user varies by issuer, but the change should take effect immediately.
If you are removing yourself as an authorized user
If you are removing yourself as an authorized user on an account, the process is the same as above.
Step 1: Call your credit card company’s customer service number (found on the back of your card) and ask to be removed as an authorized user on the account. Depending on the issuer, you may be able to do this through your online account or via the company’s mobile app.
Step 2: As an extra precaution, follow up with a letter that references the call to the customer service line, the date of the call, the last four digits of the account that you would like to be removed from and your full name. Should any mistakes be made, sending the letter via certified mail will give you some proof of your communication.
Card issuers have separate processes for removing authorized users. Not all of them will remove an authorized user without getting the go-ahead from the primary account holder, so you may need to have them call the card issuer too.
It’s worth noting that once you’re removed, you will no longer be allowed to use your card or redeem rewards. If you have any automatic purchases set up with that card, make sure to go online and add a different account or your purchases will be declined.
Risks of becoming an authorized user on a credit card account
It’s straightforward to add and remove authorized users, but there are risks involved, for the authorized user as well as the primary cardholder.
Most notably, the financial behavior of the cardholder will be reflected in the authorized user’s credit score — good and bad. For instance, if the primary cardholder of your authorized user account misses a payment, it could show up on your credit report and, subsequently, reduce your credit score.
Experian says it does not report late payments on the authorized user’s credit report. Equifax and TransUnion may report both positive and negative items for authorized users.
There are other nuances of the relationship to consider. For example, if you are added as an authorized user and the primary cardholder doesn’t let you know the available balance on the card, your credit card could be declined.
Reasons to remove an authorized user
If you’re the primary cardholder, on the other hand, there may come a point when you need to cut ties with an authorized user on your account.
The decision to remove an authorized user may be a difficult one if the person is a family member or friend. However, let’s consider some of the circumstances that warrant removing an authorized user to protect your own finances.
- The cardholder is financially reckless with payments. When you add a family member or close friend as an authorized user, you must lay down boundaries to avoid bad habits. If their spending gets out of control, it’s time to remove them from the account.
- The authorized user is going over their credit limit. If the authorized user can’t respect the spending limit you’ve set? Time to take them off your account.
- The authorized user isn’t paying you for their charges on the account. As the primary cardholder, you are liable for any and all payments due at the end of each billing cycle. It is incredibly important to establish a payment plan with an authorized user to ensure their charges are paid for. If this becomes a hassle or the authorized user refuses to pay, it’s time to remove them.
- The authorized user’s credit has improved, now what? If the authorized user can now qualify for their own credit card, perhaps one with solid rewards and benefits, then mission accomplished! It may be time to let them move on.
How being an authorized user impacts your credit
Depending on the financial habits of the primary cardholder, becoming an authorized user can be good or bad. If the account holder makes payments on time and keeps balances low, your credit score can go up. That’s why becoming an authorized user is often recommended as a way for students, young adults or those with a rocky credit history to build their credit.
On the other hand, if the primary cardholder regularly makes late payments, fully utilizes the card’s credit limit or carries a large balance, the credit bureaus could use this information against the authorized user.
Late payments could show as negative on your Equifax and TransUnion credit reports. Your credit score could also suffer due to a high credit utilization ratio, which is the second most important factor in determining your credit score.
Debt as an authorized user
Another thing to keep in mind if you’re the authorized user is any debt balances that accrue.
It might be in your best interest to work with the cardholder and pay down the debt together — especially if you were responsible for some of the charges. You’re not legally obligated to make any payments, though, because the debt isn’t in your name.
The situation changes a little if you’re married to the primary cardholder. In community property states, the spouse is legally liable for debt incurred by a spouse during the marriage.
Community property states:
- New Mexico
*Note: Alaska is not recognized as a community property state but allows couples to opt into a community property relationship.
In other states, a non-signing spouse cannot be sued for debt.
How does the process differ for joint accounts?
An alternative to adding an authorized user is opening a joint credit card account. In this instance, the application is joint and both individuals’ credit scores, incomes and financial backgrounds are used to make the approval decision for the card. Plus, both parties are equally responsible for the balance on the card.
However, it’s not as easy to separate yourself from a joint credit card account, whether you are the primary user or a co-signer.
If you want to be removed from the account, you’ll have to call the credit card provider and be prepared to negotiate. If the other account holder would qualify for the card on their own, the credit card company may approve your request. If not, your only option is to pay off any outstanding debt and close the account. You remain liable for any payments, and any activity will continue to be reflected on your credit reports.
The bottom line
Weigh the consequences carefully before entangling someone’s finances with your own. Becoming an authorized user can be a great way to build your credit, but you should understand your responsibilities and take action to protect your credit score if the other party is facing financial difficulties.