There are many ways to build your credit when you’re starting from scratch or trying to bounce back from past financial mistakes. One strategy that might help you is becoming an authorized user on someone else’s credit card account.
Research shows that nearly half of authorized users typically have a credit score of 680 or higher—a score that’s considered good. Although the authorized user strategy works well for many consumers, it’s not always as straightforward as it seems.
Piggybacking on someone else’s credit card might help you build credit, but sometimes it won’t. And in certain unfortunate situations, being an authorized user could backfire and send your credit scores sliding downward instead.
What Is an Authorized User?
Being an authorized user means you have a credit card in your name that’s attached to someone else’s account. Because you’re not the primary account holder, you’re generally not responsible for the charges made on the card—at least not in the eyes of the card issuer.
As an authorized user, you can use a credit card to make purchases. However, you do not have the authority to make changes to the account. For example, you can’t request a credit limit increase or add other authorized users. That power lies with the primary account holder.
Be careful not to confuse authorized user status with having a joint credit card account with someone else. With a joint credit card, you apply for the account alongside another person like a spouse or parent. If the card issuer approves your application, you and your co-borrower are equally liable for any charges made to the account.
How To Become an Authorized User
Becoming an authorized user on someone else’s account is relatively easy. It starts with your family member or friend contacting their credit card company over the phone or online to make the request. From there, your loved one gives the card issuer your name and personal information like your date of birth and Social Security number.
Once the card issuer approves the request, a credit card will be mailed to the primary account holder in your name. At that point, it’s up to your loved one to decide whether to give you the credit card to use or hang onto it for safekeeping. Parents, for example, might want to hold on to the card and only give it to their son or daughter to use at specific times.
With most credit cards, adding an authorized user is free. Yet some card issuers may charge fees to include authorized users on your account (this practice is more common with premium rewards credit cards). Adding an authorized user to The Platinum Card® from American Express will cost you $195 per year (for up to three authorized cardholders – Terms Apply. See rates & fees). With the Chase Sapphire Reserve®, you’ll pay $75 per year for each authorized user you add to your account.
How Does Becoming an Authorized User Affect Your Credit?
Being an authorized user on someone else’s account could affect your credit. And although there’s a solid chance your credit rating could benefit from becoming an authorized user, whether it ultimately does or doesn’t is largely out of your control.
1. Being an Authorized User Could Help You Build Credit
Let’s take a look at the best-case scenario first. When a loved one adds you as an authorized user to an existing account, the action might give your credit score a boost.
For an authorized user account to potentially help your credit, three things need to happen:
- The account needs to be free of negative payment history. Late payments on a credit card, even from a few years ago, aren’t a good look from a credit scoring perspective. In fact, the payment history on your credit reports (authorized user accounts included) has more influence over your credit score than any other factor. If a loved one is going to do you a favor and add you as an authorized user, you should ask them to please add you to an account with zero late payment history.
- The credit utilization rate on the account should be low. FICO and VantageScore, the two major credit score brands in the United States, both use credit scoring models that focus a lot of attention on your credit utilization ratio. If your credit reports show an authorized user account with a high balance relative to its credit limit, it could be bad for your credit scores even if all of the payments are on time. It’s generally good to aim for a credit utilization under 30%.
Asking your loved one to add you to an older credit card account could potentially give your credit score an extra boost. Older accounts tend to be better for your credit scores thanks to the way scoring models work.
2. Being an Authorized User Might Not Impact Your Credit
Credit scoring models only consider information that’s currently on your credit report—nothing more and nothing less. So, for a credit card to affect your scores, it must show up on your credit reports with Equifax, TransUnion and Experian. If a card issuer doesn’t report authorized user activity to the credit bureaus, being added to the account won’t impact your credit.
Thankfully, many card issuers do report authorized user activity to the major credit bureaus. The primary account holder can ask about the company’s credit reporting policy when he or she calls to add you to the account.
You should review your three credit reports around 60 days after becoming an authorized user to verify whether the account shows up.
3. Being an Authorized User Could Hurt Your Credit
There are a few situations where piggybacking on a loved one’s credit card account might hurt you. Your credit score could be in trouble if the primary cardholder:
- Pays the bill 30 days late or worse
- Runs up a big balance relative to the credit limit on the account
- Receives a credit limit decrease from the card issuer (triggering a higher credit utilization rate)
Note: Experian states that it does not include negative payment history on the credit reports of authorized users. So, your Experian-based credit score might be fine even if the primary account holder pays late. Equifax and TransUnion, however, both warn that negative payment history on authorized user accounts could hurt both you and the primary account holder.
Remember, as an authorized user you’re not legally liable for the debt. So, if the primary account holder pays late or runs up a big balance relative to his or her credit limit, you have the option to be removed from the account. A phone call or online request to the credit card issuer is often all it takes to remove yourself from an account. Some card issuers, however, only allow the primary account holder to make this request.
Once you’re no longer an authorized user, the credit card company should ask the credit bureaus to delete the account from your credit reports. However, if the account continues to show up on your reports after you’re removed from it, you can dispute the mistake with the credit bureaus on your end.
Read more. Credit Cards For Bad Credit
Risks of Being an Authorized User
If you’re comfortable asking someone you trust to do you a favor and make you an authorized user, there’s minimal risk involved with giving the authorized user strategy a try. Becoming an authorized user on a well-managed credit card could help you build good credit, even if you’re starting from scratch. In the event something goes wrong, you or your loved one have the option to call the card issuer and remove the authorized user from the account.
The primary account holder, on the other hand, will be accepting more risk than the authorized user. He or she will be legally on the hook for any charges an authorized user makes on the credit card account. If your loved one is worried about accepting this responsibility, he or she could keep the physical card instead of handing it over to you when it arrives. Alternatively, some credit card companies let cardholders set individual spending limits for authorized users.
Finally, remember that having a friend or family member add you to an existing credit card is just one step in a credit-building journey. It’s still important to establish credit on your own. As you open accounts and develop good credit management habits, there’s a good chance your credit scores will continue to climb.
Bottom Line
Authorized usership is a great and relatively safe way to build credit with the help of a more creditworthy trusted family member or friend. Becoming an authorized user comes with the same responsibilities of card ownership, but can be rewarding in terms of both opportunity to strengthen credit and access to cards with better rewards and benefits.
To view rates and fees for The Platinum Card® from American Express please visit this page.
Frequently Asked Questions (FAQs)
How long does it take for an authorized user account to show on a credit report?
An authorized user’s credit report will show a new account by the end of the next billing cycle. Typically, an authorized user’s account will report within 30 days of account opening.
How much will my credit score go up if I become an authorized user?
How your credit score is affected by your use of an authorized user account will depend on several factors related to how credit is scored. For example, if you fail to make payments on time or use too much of your available credit, your score can suffer. With responsible use, your credit score can steadily improve and your credit history will strengthen. Building a strong credit profile takes time—often years—so remain patient and always make payments on time.
Why did my credit score drop when I was added as an authorized user?
A few factors may cause a drop in a credit score following a new account opening. An issuer typically makes a hard inquiry into your credit when evaluating you for a new account, so if you applied for cards on your own before deciding to become an authorized user, this may have caused your score to temporarily drop a few points.
If you have applied for too many accounts recently, your score may also drop. If you have many accounts but no variety—for instance, only credit card accounts and no other types of accounts, this may also affect your credit score negatively. Finally, if you immediately make large purchases with your card and your credit utilization rises too high, your credit may also suffer.
Can an authorized user be denied?
Yes, authorized users can be denied. Typically, the reasons are more straightforward than with a typical credit card application. Reasons for denial might include age restrictions or limits on the number of authorized users instead of the creditworthiness of the authorized user—typically, a hard credit pull is not made when an authorized user is added to a card.
Will adding my child as an authorized user help my child's credit?
Adding a child to a credit card account as an authorized user is a well-used and effective strategy to help a teenager establish and begin to build credit several years before they will need to use it. This can help set young consumers up for financial and credit success earlier. Only responsible teenagers should have access to a credit card, as a primary cardholder is ultimately responsible for an authorized user’s card use.
