What You Should Know About Adding an Authorized User

Most credit cards let you add another user to the account, an authorized user who receives a separate credit card with their own name on it. This person is able to use their credit card just like you can and, in many cases, the full account history is listed on the other person’s credit report.

You might add a spouse, significant other, or child or sibling as an authorized user to your credit card. Perhaps you want to be able to use the account without having to get your credit card first. Or, maybe you want to help them improve their credit score.

Both you and the authorized user share the same credit card account, which means the authorized user’s purchases will increase the balance due and decrease the amount of available credit. It’s important to remember this if you intend to use the credit card yourself. Always check the available credit before you make purchases and tell the authorized user to do the same.

Once you add the authorized user, the entire account history appears on their credit report – good or bad. A good account history will generally help boost their credit score, while a negative account history can bring down their credit score. Note that he VantageScore doesn’t include authorized accounts in its credit score.

Credit Card Balance Responsibility

The credit card issuer will continue to bill you, so you and the authorized user should decide who’s going to pay for the purchases. Before you add another person to your credit card, make sure you can trust them to make payments as agreed. Or, if you’re going to foot the bill for all the credit card charges, make sure you can afford it.

Having an authorized user is risky because the credit card issuer will hold you responsible for the credit card balance even purchases the authorized user made. Late payments will appear on both your credit reports, but the credit card issuer will pursue you for payment. That may include turning you over to a collection agency or even suing you for the outstanding balance.

You can always remove the authorized user with a quick call to your credit card issuer. The issuer will remove that person from the account and deactivate their credit card so it can no longer be used. For example, you might remove your adult children from your credit card once they’re old enough and established enough to get a credit card on their own. Or, if your authorized user is being reckless with the card, cutting them off is a good way to reduce the damage they can do to the account.

Alternatives to Authorized User Accounts

A joint account is an alternative to an authorized user account. With a joint account, both people apply for credit together and the credit card issuer evaluates both your credit histories before granting credit. Both people are jointly liable for the balance on a joint account so the credit card issuer will pursue both people for any outstanding, delinquent balance. You can’t easily remove the joint account holder like you can with an authorized user. Instead, you’d have to close the account completely, removing access for both people.

If you want to help a loved one rebuild bad credit, consider loaning or gifting them enough money to get a secured credit card in their own name. That way, your credit score isn’t on the line and the person is responsible for rebuilding credit on his or her own merit, not based on the strength of your credit history.