Authorized User On Credit Card: What You Need To Know

An authorized user is someone who receives access to a primary cardholder’s credit account with approval from that person and the card issuer. Authorized users typically get a separate credit card with their name on it. And while they aren’t legally responsible for repaying card charges, their credit can be positively affected if the account they gain access to has a track record of making on-time payments.

For this reason, being added as an authorized user is often recommended as a smart credit-building step for those who are at the beginning of their credit journeys. However, it’s important to note that just as consistent payment activity is likely to improve the credit scores of authorized users, their credit will be pulled down by late or missed payments on the account.

There are two common ways for people to share a credit card account: joint accounts and authorized users. In both cases, multiple people can use the same credit card account to make purchases and build credit history. The most important difference between the two lies in who is ultimately responsible for the debt on the account.

With a joint account, both parties are equally responsible for making payments whereas an authorized user is not liable for the bills on the account. There are smaller distinctions as well. For example, an authorized user can, in most cases, easily remove him or herself from an account. Meanwhile, in most cases, a joint account would need to be closed if either member wanted to be removed.

Becoming an authorized user can help you build credit. The entire account history appears on the authorized user’s credit report, including its maximum credit limit, balance at the last statement and payment history. This can help authorized users improve the main factors that impact their credit score:

• Payment history. The authorized user inherits the payment history of the account. If the cardholder has a long history of making on-time payments, the authorized user’s report will also reflect this.
• Credit utilization. If the primary account holder has a high limit but uses relatively little of the balance, this could positively impact the credit score of the authorized user.
• Length of credit history. Becoming an authorized user on a card that has been open for a long time will increase both the average and maximum age of your credit accounts, positively impacting your score.

For the Authorized User

Most credit card companies report an authorized user’s credit activity to the three major credit bureaus in the U.S. (Transunion, Experian and Equifax). Positive account activity like on-time payments and low credit utilization will benefit an authorized user’s credit when it’s reported.

Becoming an authorized user on a rewards credit card can extend some of the account’s benefits to you as well. These can include airport lounge access, credits for TSA PreCheck and other perks. The primary cardholder should carefully check the terms of their card agreement—each issuer extends different benefits to authorized users.

For the Primary Cardholder

Adding an authorized user can keep an old credit card account active. The primary cardholder can also increase his or her credit score if the authorized user practices responsible spending habits.

Some banks set limits on the number of authorized users allowed on an account. It is important to remember that the primary cardholder is ultimately responsible for the spending of authorized users so you should only authorize people you trust. You can call your bank directly to see if there’s a limit to the number of people you can add as authorized users if you hope to add more than a few.

The primary cardholder can add an authorized user by logging into their online account or calling the number on the back of the card. Note that some credit cards charge an annual fee for adding an authorized user so be sure to read your card’s terms before moving forward.

A simple phone call to the issuer is all that’s needed to remove an authorized user. The authorized user’s card will be deactivated and his or her name will be removed from the account.

How To Remove Yourself as an Authorized User

It’s usually quite simple to remove yourself as an authorized user by simply calling your credit provider and asking them to do so. Depending on the bank this may be enough. Some banks may require the primary cardholder to request these changes, in which case you’ll have to ask the person to call for you. In the rare event that you are unable to remove yourself and the primary cardholder won’t ask the card issuer to remove you, you could use the credit report dispute process to get the account removed.

Yes. Being an authorized user can be a useful way to build credit history. However, be aware that late or missed payments from both the primary and authorized users will be added to both credit reports, so it’s important to keep your accounts in good standing.

How Long Does It Take for an Authorized User To Show Up on a Credit Report?

If this information is reported, it will typically show up on your credit report in around 30 days. However, some lenders do not report authorized users to credit bureaus, in which case the authorized user may not appear at all. If a month passes and you do not see the new authorization showing on your credit report when you believe it should, contact your credit provider and ask them if they have received info on the new user.

For the Authorized User

An authorized user’s credit will be impacted by the actions of the primary cardholder. The primary cardholder should always make payments on time and only use a portion of available credit across all accounts. While these factors can benefit an authorized user trying to build good credit, they can also hurt their credit score. If the primary cardholder has poor standing or misses a payment, both the primary cardholder and authorized user will be impacted.

For the Cardholder

Because an authorized user has spending access to the primary cardholder’s account, overspending is a possibility. Ultimately the primary cardholder is responsible for all charges made to both cards. If the authorized user fails to follow a spending plan, this could put undue financial pressure on the owner of the account. Simply put: Adding an authorized user represents a potential strain on personal relationships if problems arise.

Adding an authorized user to a credit card account can have benefits. Both parties can increase credit scores with responsible spending habits. But overspending is an easy mistake to make, especially if it’s not caught early, so a primary cardholder should monitor account activity frequently to prevent any mishaps. Adding an authorized user to a credit card is a risk for both parties, but it’s a helpful thing to do for a friend or family member who might be struggling financially or just starting out. As always, the best advice is to consider all options before making a decision.