What Is an Authorized User on a Credit Card?
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- Becoming an authorized user on another person's credit card account is one popular way to establish and build a credit history.
- A credit card authorized user can make purchases with the credit card as if it were their own. However, the responsibility to pay any charges remains with the primary cardholder.
- If becoming an authorized user has helped your credit, remember that your removal from the account could also impact you.
It can be tricky to build credit when you have little to no experience using credit. One popular strategy to establish credit history is to become an authorized user on another person's credit card account.
What is an authorized user?
An authorized user is someone who's been added to a credit card account by the card's owner, also known as the primary cardholder. The authorized user can make purchases with the credit card as if it were their own. However, the responsibility to pay any charges remains with the primary cardholder.
How does being an authorized user affect your credit?
There are a few ways that becoming an authorized user can impact your credit.
Authorized user accounts may be included in your credit report and can help you improve or build your credit history. When the primary cardholder has a history of responsible credit behavior — which may include on-time payments and a low level of debt compared to available credit — the account could also improve your credit score.
However, it's not just positive credit behavior that could appear on your credit report. If the primary cardholder has a history of missed payments or other negative behavior, your credit is unlikely to benefit from the account.
A card issuer must report the authorized user account to the three nationwide consumer reporting agencies (Equifax, TransUnion and Experian) in order for it to appear on your credit report. If the card issuer does not report the activity, being an authorized user will have no effect on your credit. Contact the card issuer before becoming an authorized user to confirm that they will report the authorized user account.
What responsibilities does an authorized user have?
Authorized users have no legal duty to pay for charges to the credit account. The primary cardholder is the one ultimately responsible for making payments.
However, that doesn't mean an authorized user should spend without limit. It's a good idea for the authorized user to track their spending and pay back the primary cardholder for their purchases.
If your sole purpose for becoming an authorized user is to build or improve your credit history, you can do so even without having a credit card issued to you. If you fear you may not be able to practice good credit habits, this is something to keep in mind.
How to add or become an authorized user
Authorized users are often related to the primary cardholder. They might be a child, another family member or even a close friend. However, anybody can become an authorized user if they meet the card issuer's age requirements and the primary cardholder approves the addition.
If you're interested in becoming an authorized user, speak with a trusted friend or relative about the process. Once you've reached an agreement, the primary cardholder must authorize the credit card company to add you to their account. They can do so via telephone with the card issuer, or online through the bank's mobile app or website. There may be a fee for adding an authorized user, depending on the credit card provider.
Once approved, you will have the option of having a new credit card issued in your name. Keep in mind that you are not required to request or receive a credit card as an authorized user. Simply being on the account — provided you exhibit responsible credit behavior — can positively impact your credit history.
How to remove an authorized user
In some instances, authorized users may be able to remove themselves from an account by contacting the card issuer directly. Otherwise, the primary cardholder must get in touch with the financial institution to have an authorized user removed.
If becoming an authorized user has helped your credit, remember that your removal from the account could also impact you. This is especially true if you have little credit history outside of the authorized user account.
Managing your credit as an authorized user
If you are an authorized user on someone else's account, here are a few steps to take if you're looking to form positive credit habits:
- Ask to become an authorized user on the account of a friend or family member who has good credit. The primary account holder's financial behavior is tied to your own, so it's important to choose someone you trust.
- Build good financial habits, track your spending and work out a payment plan with the primary account holder. Any missed or late payments will show up on both the primary cardholder's and your credit history. So, it's important to make smart spending decisions.
- Keep a careful eye on your credit report and credit score throughout the process. Monitor your credit and note any changes that come with being an authorized user. A free monthly VantageScore® 3.0 credit score and Equifax credit report are available when you sign up for Equifax Core Credit™. A VantageScore is one of many different types of credit scores. You can also visit AnnualCreditReport.com to access a free credit report from each of the three nationwide consumer reporting agencies every 12 months.
Taking these steps may help you develop healthy financial habits and develop a positive credit history in the process. That way, if you decide to apply for a credit card of your own someday, you'll already be set up for success.