Does Taking Someone Off as an Authorized User Hurt Their Credit?
Understand the specific credit score and report effects when an authorized user is removed from a credit card account.
An authorized user on a credit card account is an individual permitted to use the primary cardholder’s credit line and make purchases. They are not legally responsible for the debt incurred; the primary cardholder retains all financial liability. People are often added as authorized users to help them establish or build a credit history, or for practical convenience in managing shared household expenses.
How Authorized User Status Influences Credit
Being an authorized user can impact an individual’s credit profile, often serving as a way to build credit. When an individual is added to a credit card account, the primary account’s payment history, credit limit, and utilization are reported to major credit bureaus like Experian, Equifax, and TransUnion. This means the authorized user’s credit report can reflect the primary account’s activity. If the primary account holder manages the card responsibly, making on-time payments and maintaining low credit utilization, this positive behavior can benefit the authorized user’s credit score.
The authorized user effectively “inherits” the credit history associated with that account, including a longer credit history and a higher available credit limit. This can improve their credit utilization ratio, which is an important factor in credit scoring models. However, the influence on the authorized user’s credit depends on the primary account holder’s financial habits. If the primary account experiences late payments or high balances, these negative marks can also appear on the authorized user’s credit report, potentially harming their score.
Impact of Removal on an Authorized User’s Credit
Removing an individual as an authorized user can have varied effects on their credit, depending on the account’s prior state and the authorized user’s overall credit profile. Once removed, the credit card account will be deleted from the authorized user’s credit report. This means all historical data from that account, positive or negative, will no longer contribute to their credit score.
If the authorized user benefited from a well-managed account with a strong payment history and low credit utilization, their credit score may decrease following removal. Losing this positive data, especially if it was an older or significant credit line, can shorten their average age of accounts. The length of credit history is a factor in credit scoring, and a sudden reduction can negatively impact a score. Additionally, removal can alter the authorized user’s credit utilization ratio. If the removed account provided a substantial portion of their total available credit, its disappearance could cause their personal utilization ratio to increase, potentially lowering their score.
Conversely, if the primary account had negative marks, such as late payments or high credit utilization, removing the authorized user can improve their credit score. In such cases, the removal cleanses the authorized user’s credit report of detrimental information. For instance, Experian may automatically remove delinquent authorized user accounts, preventing negative impacts. The impact on credit mix, which considers different types of credit, can also occur if the removed account was a unique credit type for the authorized user. These changes typically reflect on a credit report within one to two billing cycles.
Considerations for the Primary Account Holder
Removing an authorized user from a credit card account does not directly impact the primary account holder’s credit score. The primary account holder’s credit history, utilization, and payment behavior are tied to their own management of the account. Adding or removing an authorized user does not trigger a hard inquiry on the primary account holder’s credit report, which would cause a temporary dip in score.
The primary account holder remains responsible for the account, including any charges made by the authorized user before their removal. After removing an authorized user, it is advisable for the primary account holder to request a new card with a new number. This helps prevent any unauthorized use of the card by the former authorized user. Ensuring the removal process is complete with the card issuer is a practical safeguard.