What Is an Authorized User on a Credit Card?

Introduction

Adding an authorized user to your credit card has pros and cons. And it can impact your credit report, for better or for worse.

Some of the advantages include consolidating purchases with your spouse or providing an emergency credit card for your out-of-town college student. But before adding someone to your credit card, you also need to consider the potential drawbacks.

Approaching the decision with a well-rounded understanding will help prevent your credit (and your authorized user’s credit) from being negatively impacted.

What Is an Authorized User on a Credit Card?

An authorized user — also called an additional cardholder — is someone who’s allowed to use a credit card account without being the primary cardholder. Often this person can be anyone the primary account holder wants to authorize, but there may be a minimum age requirement.

The authorized user enjoys many of the same benefits as the primary cardholder. That includes a credit card with their name on it, which they can use to make purchases, just like the account owner.

But authorized users aren’t allowed to make changes to the account, like closing it or asking for a credit line increase. And the credit card issuer may treat the primary and authorized users differently when it comes to credit reporting.

What Responsibilities Does an Authorized User Have?

When it comes right down to it, the authorized user doesn’t have any responsibilities. They’re not under any obligation to pay the credit card bill, and they’re not considered at fault for exceeding the credit limit or making late payments.

The primary cardholder is fully responsible for managing the card and paying off its balance, even if the authorized user made most — or all — of the purchases.

Do Authorized Credit Card Users Build Credit?

Whether or not the authorized user builds credit alongside the primary cardholder depends on how the card issuer reports activity for authorized users.

Some banks report all account activity to the credit bureaus for both users. If that happens, both the primary and authorized users can be building credit. But if the card gets maxed out or the primary user makes late payments, both users will receive a black mark on their credit reports.

Other financial institutions only report the activity of some authorized users. For example, Credit One Bank reports spouses, but not friends or other family members, including siblings, children, or parents. This means your spouse could be building credit as an authorized user — as long as payments are made on time and they maintain a healthy credit card utilization ratio — but your kids can’t.

Authorized users who aren’t reported to the credit bureaus won’t see a change in their credit score. So, depending on the card you have and who your authorized user is, they may not be getting any piggybacking benefits.

How Long Does It Take for an Authorized User To Show on a Credit Report?

If an authorized user is included in the card’s credit reporting activity, it should be reflected on their credit report within one billing cycle, which is typically 30 days. However, it may take a few months in some cases.

Once it does, all balance and payment activity on the credit card can be reflected in the credit reports of all users. This can be good or bad for the authorized user — and the primary user —  depending on how the card is used.

Just as on-time payments and lower credit utilization will help an authorized user build credit, late payments and high utilization of available credit may lower their score and harm their credit rating. This can make it more difficult for them to apply for high-value credit cards and take out low-interest loans.

If you’re adding an authorized user simply to build their credit, make sure you can make all the payments on time and can keep the balance as low as possible.

How Many Authorized Users Can Be on a Credit Card?

The number of authorized users you can have on a single credit card account depends on the card issuer. Some have a limit of four or five users, while others don’t have any maximum.

How To Add an Authorized User to Your Credit Card

Adding an authorized user is usually pretty simple and should only take a few minutes. Typically this can be done online or by phone.

If you call your card’s customer service department to set it up, have a few pieces of info handy first. That includes the authorized user’s name, birth date, address, and Social Security number.

The same type of information is likely required if you decide to make the request online or through your credit card mobile app. Simply log in to your account, look for a link to “Add Authorized User,” and follow the prompts to fill out the form. You may also need to upload attachments with supporting documentation. Sometimes there’s a fee involved for doing this, so make sure you understand the parameters before submitting the request.

How To Remove an Authorized User From Your Credit Card

Removing an authorized user should also be a simple process, but there may not be an option to do this through your online account. If you log in but don’t see any way to remove the authorized user, just give the customer service department a call. The phone number will be printed on the back of your credit card.

As the primary account holder, you have full control over who is allowed to use your credit card account. So this request will probably only take a few minutes to finalize.

Pros and Cons of Adding Authorized Users

Adding an authorized user should be considered carefully because it comes with potential downsides as well as upsides. And the degree of each depends on the card issuer.

Pros of adding an authorized user

• If it’s reported to credit bureaus, it may help the authorized user build positive credit history.
• If both users are responsible with the card, it may boost the authorized user’s credit score.
• It allows the primary cardholder to earn rewards and benefits on the authorized user’s purchases.
• It provides the authorized user with the opportunity to learn good financial habits.
• It gives the authorized user a means of paying for items online or where cash is impractical.
• It provides more choices for managing your finances.

Cons of adding an authorized user

• If the activity isn’t reported, it may not help the authorized user build credit at all.
• If the activity is reported but the primary cardholder has poor credit habits, it could hurt the authorized user’s credit score.
• If the authorized user is reckless with the account, it may negatively impact the primary account holder’s credit score.

As a primary cardholder, your credit card is your responsibility. As long as you trust your authorized user not to make unnecessary purchases and drive up your balance beyond what you can comfortably pay off, adding someone to your account could be a good decision.

However, if your balance goes up due to more spending than you can pay each month, your credit utilization ratio will increase. This may push down your credit score. Credit card utilization is a big part of your credit score calculation, and balances below 10% of the credit line are optimal — or max 30%.

Tips for Responsible Authorized User Management

Sometimes the goal of adding an authorized user is to help them build credit. Parents often do this for children who are too young to have a credit history, or spouses who need a boost, but it only works if the user is included in the credit reporting.

If you just want your loved one to start using credit, without worrying about their credit score, being an authorized user can do that as well. It can also help manage your household finances by consolidating spending.

Regardless of your reasoning for adding an authorized user, or how it affects credit reporting, all parties need to treat the account with respect. That means the primary user has to pay on time, every time, and both users should commit to keeping the utilization low instead of maxing out the card. Always discuss your expectations for spending and payment before you hand over a card to your authorized user.

Bottom Line

Adding an authorized user to your credit card can have advantages for both parties. It can also have disadvantages, including a potential impact on one or both credit scores.

If you decide to set up a specific card for your authorized user to “play” with, take a look at the authorized user terms and conditions to determine if it’s the right fit for you. And make sure you can pre-qualify for the card, which doesn’t affect your credit score, before committing to applying.