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Become an authorized user

Does an Authorized User Build Credit History?



Being an authorized user can help you build credit if you use the credit card responsibly and ensure the bills are paid on time. As the authorized user on a credit card, that account is added to your credit reports. You build credit just like you would when you’re the main account holder. Here are a few things to know about being an authorized user  or adding one onto your credit card:

What is an authorized user on a credit card?

A person who has been given permission to use a credit card. It’s not as simple as asking a friend if you can borrow their credit card for a purchase. Being an authorized user requires the credit card company to be notified that they are trusted and will be using the credit card.

How to get added as an authorized user on a credit card

You’ll need a trusted family member or friend to add you to their credit card account. Some credit card companies may have guidelines like age restrictions, but most don’t. You’ll just have to confirm with your credit card issuer. It’s usually a simple process that should only take a few minutes. After the request is confirmed you will receive a new card with your name in the mail.

What to consider before becoming an authorized user of a credit card

Before you move ahead with getting added as an authorized user, you’ll want to make sure you communicate the details and expectations of paying the card. Both of you are impacted by the actions either of you take on the credit card since it shows up on both of your credit reports. Late payments and maxing out the card will usually cause your credit score to fall.

Choose your primary cardholder wisely

Just as the primary cardholder needs to consider an authorized user’s history of financial responsibility, before you are added as an authorized user to another person’s credit card, make sure the primary account holder is financially responsible.

That’s because if the primary account holder misses a payment or maxes out the card, your credit could be negatively affected.

How being an authorized user impacts your credit score

You can work towards a good or excellent credit score with regular on-time payments as an authorized user on a credit card. However, just like accounts you hold on your own, if you make late payments then your credit score will likely drop.

If you have little or no credit history, becoming as an authorized user is one way to build your credit history. It helps you work your way up and raise your credit score.

Regularly paying the credit card bill on time and not using too much of your available credit are both still important, just as they are when you have your own credit card. Payment history and credit utilization (the amount of credit you’re using compared to your credit limit) are the two biggest factors of most credit scores, including the FICO® Score and VantageScore. Those are the two of the most common credit scoring models.

However, being an authorized user isn’t the only thing that impacts your credit score. You still want to make sure that you pay any loans and credit cards on time as well. Applying for too many credit cards or loans in a short period of time will also likely cause a small drop in your credit score.

What to consider before you add someone as an authorized user on your card?

On the other side of things, if you are considering adding someone as an authorized user on your credit card then you’ll want to make sure the person you’re adding will act responsibly with the credit card. Because you’re ultimately the one responsible for making the credit card payments. The person you add won’t be on the hook if they max out the card and leave you to foot the bill. So, consider it carefully before putting someone else on your account as an authorized user.

If you do add someone as an authorized user and they don’t pay the amount they spent, you’ll want to work to pay off the credit card debt as quickly as possible to minimize the impact on your credit score. If you worry you may fall behind on credit card payments, contact your credit card issuer and let them know your situation. They may be able to work with you to set up a payment plan. Contacting your credit issuer is always the best bet before you fall behind on making payments.

Authorized users receive a card of their own

When you become an authorized user on someone else’s credit card, you may receive your own card for the account with your name on it. Just like the primary cardholder, you can make purchases with the credit card as long as those purchases stay within the card’s credit limit. However, the primary cardholder is responsible for making payments.

If you’re the primary account holder considering adding an authorized user, make sure the person is responsible and agrees to limits you may personally impose on spending before adding as an authorized user, since you are the one responsible for paying the statement balance.

The primary cardholder is fully responsible for payment

Only the primary cardholder, not the authorized user, is responsible for making timely payments on a credit card that has an authorized user. Of course, the authorized user should pay the primary cardholder if that’s the agreement between the parties, but no one can legally force the authorized user to pay.

So, if you’re the primary account holder and your authorized user turns out to be a deadbeat who misses or stops making payments, you’ll still be on the hook for the balance.

Adding an irresponsible authorized user could hurt your credit

Before you add an authorized user to your credit card, make sure you know that person well. Does he always pay his bills on time or does he have a history of missed car payments? Just like credit card companies look at payment history, so should you, since you’re the one who has to make payments directly to the card’s issuer.

If an authorized user doesn’t pay you what he or she owes or goes on a spending spree and runs up such a huge balance, as the primary account holder, you’re still the one responsible for paying. And if you have trouble affording monthly payments or paying the balance off, your credit could suffer.

An authorized user’s prior credit problems won’t affect the primary cardholder’s credit

If you add an authorized user to your credit card, your payment history — for that credit card account only — will show up on that person’s credit report, potentially helping their credit. But that person’s payment history won’t show up on your credit report, which is a good thing, especially if you’re trying to help someone rebuild their credit after having a poor payment history or declaring bankruptcy.

Understanding authorized users vs. cosigners vs. joint account holders

There are a few different types of accounts that can have two or more names on them. How these accounts impact your credit vary.

Comparing types of credit users

 Authorized UserCosignerJoint Account Holder
OverviewYou can use someone else’s credit card. However, you’re not the primary account holderSomeone who applies for a loan with you and agrees to pay off the debt if you do not make paymentsTwo users share joint responsibility for a credit card, loan, or another financial account
How to become oneThe primary account holder adds you to their credit card account as an authorized userA cosigner applies for and signs off on the loan with you when it’s issuedYou must apply for the credit card as a joint applicant, meeting all lender requirements
ProsYou can use the credit card just like it’s your own Authorized users build credit You aren’t legally responsible for the credit card payments Usually doesn’t involve a credit checkYou may be able to qualify for a higher loan amount or lower interest rate with a cosigner (or you may qualify for a loan you wouldn’t otherwise get without a cosigner)Both parties get the same credit limit and full benefits as account holders
ConsYou can’t make changes to the account Late payments or high credit usage will still show on your credit reportA cosigner is legally responsible if the other party defaults on the loanThe pro can also be a downside — you’re legally responsible for the debt on the account if the other holder doesn’t pay
Common UsesA parent adding a child as an authorized userA parent, spouse or family member cosigning a loan for someone who has poor credit, little credit, or no credit historySpouses share a credit card as joint account holders

Most credit card issuers report authorized users… but not all

All major credit card issuers report authorized users to the credit bureaus along with the primary account holder. Credit card issuers aren’t required by law to report to each of the three major credit reporting agencies – Equifax, Experian, and TransUnion – though most do.

However, if your credit card is issued by a local bank or credit union then you may want to confirm which credit bureaus they report activity to each month. That way, you can ensure that using the account as an authorized user will help your credit reports.

How long does it take for an authorized user to show on a credit report?

If the authorized user is being reported to the credit bureaus it should take a month to show up on your credit report. Contact the credit issuer and confirm they received the new users information if you do not see the account on your report.

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