An authorized user is someone who has been added to a primary credit card holder’s account.
When you add an authorized user to your account, they can make purchases using your credit card, and most credit card companies will send the authorized user a credit card in their own name.
The primary card holder is responsible for all charges to the account.
Why Add an Authorized User?
Maybe you have a child or spouse who has no credit history or has a low credit score. This can prevent them from getting a credit card in their own name. Having a good credit score is important when applying for a loan, renting a home or apartment and when signing up for utilities and cell phone service. If someone has no credit history or has a very low score they may be denied these services.
When you add someone as an authorized user it allows them to establish and build credit in their own name.
You must have excellent credit yourself for this to benefit the authorized user. Someone with poor credit would not help the authorized user because your payment history and credit record are reflected on them.
After several months the authorized user will start to establish and increase their credit score allowing them to eventually apply for a card themselves. If they have a good credit score when applying for a credit card they can get a card with no annual fee, low interest rates and better rewards.
Adding an Authorized User
You first want to verify that the credit card company reports authorized users to the three major credit bureaus, Experian, Equifax and TransUnion. Most do but check to be sure. There is no point in adding a user to help them to establish and build credit if the company does not report their activity to the credit bureaus.
Log into your account online or call your credit card company to add a user. You will need their full name, address and Social Security number and possibly other identifying information. There is no credit check required to add the user.
You can add an authorized user without ever giving them the ability to make purchases. Each time you use your card and make a payment it is reflected on the authorized users account as well as your own. Many people add their children as users and never give them their credit card. This makes it very secure.
Removing an Authorized User
To remove a user, call your credit card company, some allow you to do it online. Once you request the removal it is typically a matter of minutes until they are removed from your account. If they were issued a credit card in their name it will be deactivated.
Does Adding an Authorized User Damage Your Credit
Just adding an authorized user does not damage your credit, but if the user is permitted to make charges to the account and they overspend you are responsible for those charges. If the balance is not paid on time or your credit utilization goes up it could lower your credit score.
Adding an authorized user should not be taken lightly. There are risks involved. Only add a person very close to you, a child or family member who have proven to be trustworthy and financially responsible.
Clearly communicate what you expect from them and then monitor the situation closely.
The Tech Minimalist 