What Does It Mean to Be an Authorized User on a Credit Card?

Within a credit card account, an authorized user is an individual who is not the primary account holder but is granted permission to use the card. This article explains the role of an authorized user, their responsibilities, and the implications for their credit.

Defining an Authorized User

An authorized user receives permission from a primary credit card account holder to make purchases using that account. The primary cardholder requests the addition of an authorized user, who then receives a card bearing their own name. This grants them access to the credit line without a direct contractual relationship with the credit card issuer.

Authorized users have no legal responsibility for debt incurred on the account. The primary cardholder remains solely accountable for all payments, including the full balance, minimum payments, and any associated fees or interest. Credit card companies cannot pursue an authorized user for unpaid balances.

Authorized users can make purchases and, in some cases, view account activity.

However, the authorized user’s access is limited. An authorized user generally cannot perform actions such as changing account details, requesting credit limit increases, closing the account, or adding other authorized users. These administrative controls remain exclusively with the primary cardholder, who retains full authority over the account’s terms and management. This structure ensures that while the authorized user can transact, the primary cardholder maintains ultimate financial and administrative oversight.

It is important to differentiate an authorized user from a joint account holder or a co-signer. In a joint account, both individuals are equally and legally responsible for the debt, meaning the issuer can pursue either party for payment. Similarly, a co-signer on a loan shares legal liability for the debt. An authorized user, conversely, has no such legal obligation, which is a fundamental difference in their financial standing relative to the account.

Credit Reporting Implications

Being an authorized user on a credit card account can influence an individual’s credit report, as the account’s payment history and credit characteristics may be reported to major credit bureaus. This reporting includes details such as the credit limit, current balance, and whether payments are made on time.

The appearance of well-managed credit on an authorized user’s report can potentially contribute to building or improving their credit score. For individuals with limited credit history, such as young adults or those new to credit, this can be a method to establish a credit footprint. Conversely, if the primary account experiences late payments or carries a high balance relative to its credit limit, these negative factors can also be reflected on the authorized user’s credit report, potentially harming their credit score.

It is important to note that while account activity is reported, the authorized user is not personally liable for the debt. The legal responsibility for repayment remains with the primary cardholder, irrespective of the credit reporting impact on the authorized user. Furthermore, not all credit card issuers uniformly report authorized user activity to credit bureaus. Practices can vary among different financial institutions, meaning that an authorized user’s account activity may or may not appear on their credit report depending on the specific issuer’s policies.

Process for Becoming or Adding an Authorized User

Adding an authorized user to a credit card account typically involves a straightforward process initiated by the primary cardholder. The primary cardholder usually contacts their credit card issuer, which can often be done through various channels, including online banking portals, a dedicated phone number for customer service, or sometimes in person at a branch. This action signifies the primary cardholder’s formal request to extend spending privileges to another individual.

When adding an authorized user, the credit card issuer generally requires specific identifying information for the individual being added. This commonly includes their full legal name, date of birth, and often their Social Security Number. The issuer may also request the authorized user’s address to facilitate the mailing of their personalized credit card.

Once this information is provided and the request is processed, a new physical credit card, bearing the authorized user’s name, is typically issued and mailed to the address provided, usually within seven to ten business days.

If the primary cardholder decides to remove an authorized user, the process is similar. The primary cardholder contacts the issuer through their preferred method and requests the removal. Upon processing, the authorized user’s card will be deactivated, and their access to the account’s credit line will be terminated, though previously reported account history may remain on their credit report.