Can Adding an Authorized User Hurt Your Credit?

An authorized user is an individual granted permission by a primary credit card account holder to make purchases using the account. This individual typically receives a credit card with their name on it, linked directly to the primary account. While an authorized user can utilize the credit line, they do not possess ownership of the account itself. Their role is generally limited to spending, without the ability to manage account details, request credit limit increases, or add other users.

Primary Cardholder’s Financial Exposure

Adding an authorized user to a credit card account places the sole financial responsibility for all charges squarely on the primary cardholder. Regardless of who makes a purchase, the primary account holder is legally obligated to repay the entire balance, including any spending by the authorized user. This can lead to increased overall balances on the account, which the primary cardholder must manage. Should the authorized user’s spending be unexpected or excessive, it can significantly complicate the primary cardholder’s ability to make timely payments.

Higher balances resulting from authorized user spending also increase the risk of accruing interest charges. The primary cardholder bears this direct financial burden, even if they did not personally make the purchases. Consequently, the primary cardholder must ensure they can cover all charges to avoid financial strain.

Primary Cardholder’s Credit Score Vulnerabilities

The actions of an authorized user can indirectly affect the primary cardholder’s credit score through several mechanisms. A significant concern is the credit utilization ratio, which measures the amount of credit used against the total available credit. An authorized user’s spending can cause the account balance to rise, increasing this ratio. High credit utilization, generally considered to be above 30%, can negatively impact the primary cardholder’s credit score.

The primary cardholder’s payment history, the most impactful factor in credit scores, can be compromised if an authorized user’s spending makes the total bill unmanageable. Any late or missed payments on the account, regardless of who caused the high balance, are reported to credit bureaus and will negatively affect the primary cardholder’s credit score.

Any negative account statuses, such as defaults or collections, resulting from unmanageable debt, will appear on the primary cardholder’s credit report. Even if partly due to authorized user spending, these events can damage the primary cardholder’s credit score. The primary cardholder is ultimately responsible for maintaining the account’s good standing.

Authorized User’s Credit Profile Considerations

Being an authorized user can significantly impact the individual’s own credit profile, even though they hold no financial liability for the debt. Credit card issuers often report the primary account’s entire history, both positive and negative, to major credit bureaus for the authorized user. This means that if the primary cardholder manages the account responsibly with on-time payments and low balances, it can help the authorized user build or improve their credit.

Conversely, negative account activity by the primary cardholder, such as late payments, high credit utilization, or account defaults, can appear on the authorized user’s credit report. Even without financial responsibility, these negative marks can lower the authorized user’s credit score.

A key aspect of this arrangement is the authorized user’s lack of control over the account. They cannot directly influence the primary cardholder’s spending habits or payment behavior. While an authorized user can typically request to be removed from the account by contacting the card issuer, they cannot unilaterally control the reporting of the account’s history while they are listed.