Does Being an Authorized User Affect Your Credit Score?
If you need to get quick access to credit, say to get a car loan or qualify for an apartment lease, and you don’t have good credit, there are ways you can get around it like getting a secured credit card or becoming an authorized user on someone else’s card.
Does Being an Authorized User Affect Your Credit Score?
Yes, being an authorized user can impact your credit score. An authorized user is someone who is added to the account of someone who already has a credit card, such as a family member, which allows for the existing credit information to be reported to credit bureaus in your name, helping you establish your credit.
Benefits of Being an Authorized User
Here are a few reasons why you should consider becoming an authorized user:
- Improve your credit score
- Build your credit history
- You will not be responsible for the account holder’s activity
- Your credit history won’t affect the account holder’s credit score
1. Improve Your Credit Score
Being an authorized user allows you to charge money to the primary holder’s card as if it was your own account. But how does being an authorized user help your credit?
For one, the credit account you use will show up on your credit report, allowing you to build a credit history. Spend your money wisely and when it comes time to pay your monthly balance, reimburse your portion of the bill to the primary account holder. Timely payments on the credit card will positively affect your credit score.
You’ll want to check on the scoring model used by the card’s provider. The VantageScore 4.0 model, for instance, might treat authorized users differently than the most recent FICO model, which could play a role in how your credit score is affected.
2. Build Your Credit History
When you become an authorized user on a credit account, the entire history of that account shows up on your report. When an older credit account is added to your credit history, your report will show an increase in the average age of accounts you’ve managed, potentially increasing your credit score.
3. You’re Not Responsible for the Account Holder’s Activity
As an authorized user on a credit account, you’re not liable for negative balances or charges. The credit card provider won’t ever ask you to cover payments owed. Authorized users can also back out at any time and have their names removed from accounts if the primary cardholders are irresponsible — which can negatively impact your credit score — often without even needing the consent of the primary cardholder.
4. Your Credit History Won’t Affect the Account Holder’s Credit Score
An authorized user is not liable for the account holder’s credit behavior, and they are not liable for your past credit history. However, an authorized user’s spending behavior might have an indirect effect on the account holder’s credit if bills are run up and not paid down.
How an Authorized User Can Affect Your Credit
If you’re a primary cardholder who is considering adding an authorized user to your account, make sure you know what that means for you and how it differs from having just a joint credit card.
Here are a few points to consider before adding or removing an authorized user:
- Account holders hold full responsibility: An authorized card user isn’t liable for any charges or balances on an account. If you add someone to your account and they charge money to the credit card, it’s up to you to pay off the credit card company.
- You can hurt an authorized user’s credit score: A primary cardholder’s actions can affect the credit score or reports of an authorized user. If you’ve added a user to your account but have maxed out your credit card or fallen behind on payments, you could hurt their credit score in addition to your own.
Credit Tips for Authorized Users
Before you add someone to your credit card, it’s important to fully understand the implications and have a plan. Here are some tips to help you manage an authorized user on your credit account:
- Figure out a payment strategy: If you plan to add an authorized user to your account, set up a reimbursement schedule. If you can entrust the user to have online account access, you can also arrange for them to hop online to pay their portion of the card’s balance each month.
- Use a low-maintenance account: A card with a generous credit limit and high penalty rates could open up too much risk. Opt for a credit card account that’s been open and active for a few years, has a lower balance-to-limit ratio and has a history of being paid on time.
- Allow an authorized user by proxy: If you have reservations about authorizing someone to use your credit card, you can still add them to your account so they can benefit passively. Simply adding them by name as an authorized user can raise their credit score.
- Transition from authorized user to official cardholder: Think of an authorized user status as training wheels for the real deal. Being an authorized user for a year or so will hopefully have increased your FICO score enough to make you an attractive customer for credit card providers.
Final Take
Whether you’re adding an authorized user or becoming one, you’ll want to communicate often about account activity. If you’re both clear about how the account will be managed, you can positively impact both credit scores while keeping your credit utilization low and maybe even netting some additional rewards for the primary cardholder in the process. If you can manage your credit card debt together, the authorized user will someday be able to have their own credit card.
FAQ
Here are the answers to some of the most frequently asked questions regarding authorized users.- Do authorized users build credit?
- Yes, being an authorized user on a credit account will build credit as the entire history of that account shows up on your report.
- Will adding an authorized user hurt your credit?
- No, authorized users are not liable for your credit behavior, and you're not liable for their past credit history. However, an authorized user's spending behavior might have an indirect effect on your credit if they run up bills they don't help you pay, or those bills go unpaid.
- How much will your credit score go up if you become an authorized user?
- The amount your credit score will go up when you become an authorized user will depend on both the usage of the credit card and if your bills are paid on time. The best way to improve your credit score is to pay all your credit bills on time.
- How does an authorized user on a credit card work?
- An authorized user is someone who is added to the account of someone who already has a credit card, which allows for the existing credit information to be reported to credit bureaus in your name, helping you establish your credit.
Caitlyn Moorhead contributed to the reporting for this article.
