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When it comes to building and establishing credit, we all have to start somewhere. But when you are just beginning your credit journey, getting your foot in the door can be an upward battle. Luckily, there’s a way to start building and improving credit without having to be preapproved. Being added as an authorized user on someone else’s credit card could be the credit building opportunity you are looking for.
Becoming an authorized user can improve your credit score, but it can harm it as well. You’ll want to be added to an account that is in good standing and has a record of on-time payments. Before becoming an authorized user, make sure you understand the basics, risks, and expectations.
What is an authorized user?
An authorized user on a credit card refers to a person who is added to someone else’s credit card account. The person who owns the credit account is called the primary cardholder. When you become an authorized user, you receive a credit card that is connected to the primary cardholder’s line of credit without having to apply for a credit card of your own. As an authorized user, you can use the primary cardholder’s credit card and piggyback off their credit card activity.
Becoming an authorized user could be a relatively quick way to start building credit for those with poor credit or a short credit history. It can also be a convenient way for families and members of the same household to simplify finances.
How does being an authorized user on a credit card work?
If you become an authorized user on someone else’s credit card, the issuer will send you a card with your name on it. As an authorized user, you can make purchases on the primary cardholder’s account, but the responsibility of paying off balances rests with the primary cardholder. Authorized users can use the card, but they can’t make any changes to the account, such as increasing the credit limit. Payments and changes are the responsibility of the primary cardholder.
Anyone can be an authorized user as long as they meet the card issuer’s age requirements; for instance, the primary cardholder can add their child, spouse, partner, or friend as an authorized user. There also may be a fee for adding an authorized user, so consult with your credit card provider to determine if it charges a fee and how much it is.
How does being an authorized user affect your credit score?
Authorized users don’t necessarily need to use the credit card in order to reap a credit score benefit. Even if you never use the card, the card activity can still be used to positively impact your credit as long as the card issuer reports authorized users to the credit bureaus. However, if your authorized user status doesn’t show up on your credit reports, it won’t help your score.
If the primary cardholder steers clear of bad credit habits and practices good ones, those habits would be reflected in your credit report and score as well. The caveat is that the primary cardholder must pay bills on time and use the card responsibly for the authorized user to enjoy a positive effect of the shared account. If they fall behind on payments or max the card out, it can hurt both of your credit scores.
Can being an authorized user hurt your credit?
It’s important that the primary account holder is responsible, makes on-time payments, and has a low credit utilization. Keep in mind that any negative account information can damage your credit standing as well. Only become an authorized user if you and the account holder are on the same page and are both committed to practicing healthy financial habits.
Pros and cons of being an authorized user
Before agreeing to become an authorized user on someone else’s credit card, review the following advantages and disadvantages.
|Can improve your credit score through a history of on-time payments and responsible borrowing.||Could harm your credit score if the primary cardholder doesn’t make on-time payments or maxes out the card.|
|You can potentially rack up more credit card rewards if you have multiple people spending on the same credit account.||Balances could add up fast with more than one person having access to spending and making purchases.|
|Makes streamlining family expenses more convenient for members of the same household.||There may be additional charges and fees when you add an authorized user to an account.|
|You don’t have to worry about paying off the balance on the card, as that responsibility falls on the primary cardholder.||As an authorized user, you aren’t allowed to make changes to the account, like requesting a credit limit increase or adding other authorized users.|
|Could be a great starting point for establishing credit, especially since many card issuers allow minors to be authorized users.||The primary cardholder can set a limit on the amount of money an authorized user is allowed to spend.|
How do I become an authorized user on a credit card?
To become an authorized user, ask a friend or family member to add you to their account. Ideally, you should ask someone you trust and who you know is a responsible account holder.
Once the cardholder agrees to add you as an authorized user, they will need to contact their bank or card issuer and request that you be added to their card account. This can sometimes be done online or through their bank’s mobile app. In other cases, they may have to call their bank. They will need to provide some basic information, including your name, date of birth, Social Security number, and contact information.
If the cardholder’s request gets approved, you will receive a credit card with your name on it that’s connected to the primary cardholder’s account. Remember, not all banks and card issuers report authorized user activity to the credit reporting bureaus. Before you go through the approval process, ask the primary account holder to confirm with the credit card company that your authorized user status will get reported.
Do authorized users get their own card?
Authorized users typically receive their own credit card with their name on it, but the account belongs to the primary cardholder.
Does adding an authorized user affect my credit?
If you’re the primary cardholder, the actual act of adding an authorized user will not affect your credit, but it could hurt your score if an authorized user racks up a balance that you aren’t able to pay back on time.
Does removing an authorized user hurt their credit score?
Depending on an authorized user’s credit situation, removing them from your account could potentially harm their credit score. When you remove an authorized user from your account, you are shortening their credit history, and having a longer credit history is a plus for credit scores. But other factors such as payment history, credit utilization, and open lines of credit can mitigate any negative effects that a removal from an account might have.
How do I remove an authorized user from my credit card?
As a primary account holder, you can usually remove an authorized user from your account by contacting your card issuer either over the phone or online. In some cases, the authorized user can also contact the card issuer and remove themselves from the account.
How many authorized users can be on a credit card?
The answer will differ from issuer to issuer, as there are different restrictions and policies around how many authorized users can be added to a credit card account. Consult with your credit card issuer to determine how many you can add. Some cards also charge a fee per authorized user, so that’s something to keep in mind.
Being an authorized user is a great way to establish and repair credit for those just starting out or who have a poor credit history. After being an authorized user for enough time to see an increase in your credit score, the next step would be to apply for a credit card on your own. Consider opening a secured credit card, such as Chime’s Credit Builder card¹, which offers a low-risk way to start building credit².