Woman sitting on step looks at her credit card
Credit Card

Key takeaways

  • An authorized user is someone who has been added as a secondary user to the account of the primary cardholder.
  • This can be a good and inexpensive way to build or improve your credit history.
  • Irresponsibility by the authorized user or primary user could hurt both of their credit scores.

If your credit history is a blank slate, learning how to fill it with positive marks can be confusing. There are many ways you can start building your credit. It can be difficult — and even costly — to get the ball rolling. Becoming a credit card authorized user is one of the simpler ways to make this happen.

It can be a challenge to pass a credit check and get approved by a credit card issuer until you’re able to build some credit history. Lenders aren’t the only ones that look at your credit history, either. Potential employers, landlords, insurance companies, and even cell phone providers will often tap into the credit bureaus to learn more about your credit standing.

Becoming a credit card authorized user can help you form the financial habits that will build your soon-to-be excellent credit. In this article, we’ll detail how authorized users can bolster their credit file and where they can find the right opportunity.

What is an authorized user of a credit card?

An authorized user is someone who has been added as a secondary user to the account of the primary cardholder. The authorized user can make purchases, and depending on the account settings and issuer, track purchases, redeem rewards, and report any issues. Because an authorized user is not the primary cardholder, they can’t be held legally responsible for charges they make.

These accounts could help someone establish responsible credit habits and build a positive credit history.

How does it affect my credit score?

The credit card company or credit card issuer reports the authorized person’s user activity to the major credit bureaus. Good credit behavior, like low credit-utilization ratios, on-time payments, and overall payment history, will have a positive impact on their credit score. In the same manner, negative behavior, like missed payments, late payments, high card balances, will cause credit score damage.

Negative credit activity by the authorized user could have credit score ramifications for the primary account holder. Likewise, any negative credit behavior from the primary account holder impacts an authorized user. If you find that you’ve been added to an account in which the primary cardholder misses payments, maxes out spending limits, or has any other issues, you may want to remove yourself. as an authorized user to protect your own credit qualification.

For new authorized users without previous credit history, it’ll take around 6 months for any activity to be reported. Your spending behavior during that time could result in a good or bad credit score.

For users who have some credit history, the new account will show up on your credit report soon after you are added as a credit account holder. At first, the new account might have a minor, negative impact on your score, but should quickly change with positive credit building tactics and behaviors.

Not all credit card accounts or credit issuers report an authorized user’s activity to credit reporting agencies. Each credit provider will have its own practices, so it’s best to call them directly or visit their online banking portals to learn about their terms before you become an authorized user.

What’s the difference between authorized users, co-signers and joint accounts?

There are key differences between these user statuses. It’s important to know the responsibilities of each and how they could impact your credit score.

As we discussed previously, authorized users are secondary users who have access to an account to make purchases. They are not held legally liable for any charges, and the primary account holder must make payments on time. As well as make sure that purchases fall within the established spending limits. Generally, it is easy to remove an authorized user from a credit account.

A co-signer is someone who vouches for a person applying for their own credit account. Essentially, the co-signer is guaranteeing the lender that if the primary cardholder cannot make payments toward their credit card balance, the co-signer will. This could help the applicant receive a higher credit limit or credit limit increase. Co-signers are held legally responsible, even though they do not usually receive a card of their own, monthly statements, or even access to the account.

A joint credit card is one that has shared responsibility and access between its joint account holders. All those named on the account get their own credit cards and access to the account. They are equally responsible for making monthly payments. It’s not always possible to remove a joint account holder. When it is possible, explicit consent from all parties is likely to be required.

Who can be added as an authorized user?

Cardholders could have many reasons to add someone to their user accounts. However, this is typically done by a family member (or trusted friend) to help someone  build credit history, a child learning about how credit works, or a relationship partner as finances are joined.

A card issuer might limit the authorized users allowed on one account. There might be restrictions on age or relationship types, so check with the lender to be sure. That being said, an account holder could choose to add an authorized user to their account at any time. They will need the user’s Social Security number and date of birth to get started. Typically, there is no cost to add an authorized user or users to a credit account.

If you want to remove an authorized user from your credit account, you should start by contacting the credit card issuer directly. An authorized user might also be able to call card member services and ask to be removed. However, some lenders specify that the primary user must call and request removal of an authorized user.

This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.


Resources

Learn more about managing debt

7 minute read
4 minute read
3 minute read
3 minute read
4 minute read
6 minute read
6 minute read
5 minute read
4 minute read

Financial confidence starts here

We have the information and insights you need to take control of your financial health.

Get started