What Happens If I Add an Authorized User to My Credit Card?

Adding an authorized user to an existing credit card account allows another person to make purchases using the primary cardholder’s credit line. Understanding the implications of this decision is important for both the primary cardholder and the authorized user.

Defining an Authorized User

An authorized user is an individual granted permission to use a primary cardholder’s credit card account. They can make purchases with a card issued in their name but are not legally obligated to pay the credit card bill. The primary cardholder retains full legal responsibility for all charges incurred on the account, including those made by the authorized user.

This arrangement differs from a joint account holder, where both parties share equal legal responsibility for the debt and typically undergo a credit check during the application process. Authorized users are often added for convenience, such as managing household expenses, or to help family members establish or improve their credit history.

Credit Score Implications

Adding an authorized user to a credit card account can have varied effects on the credit scores of both the primary cardholder and the authorized user. For the primary cardholder, their credit score is directly affected by all account activity, including the authorized user’s spending habits. High credit utilization, which is the percentage of available credit being used, or missed payments by the authorized user can negatively impact the primary cardholder’s score. Conversely, responsible usage and on-time payments by the authorized user, along with the primary cardholder’s continued good standing, can contribute to a positive credit history for the primary cardholder.

For the authorized user, the account’s history, including payment history, credit utilization, and the age of the account, often appears on their credit report. When the primary cardholder consistently makes on-time payments and maintains low credit utilization, this positive behavior can help the authorized user build or improve their own credit score. This can be particularly beneficial for individuals with limited or no credit history, as it allows them to establish a positive credit footprint without needing to qualify for their own credit product. However, if the primary cardholder makes late payments or carries high balances, the authorized user’s credit score can also be negatively affected. It is important to note that while many credit card issuers report authorized user activity to the major credit bureaus (Equifax, Experian, and TransUnion), verifying this with the issuer is advisable.

The impact on an authorized user’s credit score hinges significantly on the primary cardholder’s financial habits. A well-managed account with a long history of on-time payments can extend the authorized user’s credit history and potentially lower their overall credit utilization, contributing positively to their score. If the primary account holder has an imperfect payment history or a high utilization rate, the authorized user’s score could decrease. This underscores the importance of the primary cardholder’s responsible management of the account, as their actions are reflected on the authorized user’s credit report.

Managing Financial Responsibility

Once an authorized user is added to a credit card account, the primary cardholder assumes sole legal responsibility for all charges made. This includes purchases made by the authorized user, regardless of any informal agreements between the two parties. The credit card issuer considers the primary cardholder as the individual accountable for the entire balance. Clear communication and establishing spending limits with the authorized user are important to prevent unexpected debt.

While authorized users are not legally liable for the debt, they might agree to contribute financially to payments for their own purchases. This internal agreement is personal between the primary cardholder and the authorized user and does not involve the credit card issuer. The primary cardholder remains the only one who can make changes to the account, such as requesting credit limit increases or closing the account.

Steps to Add or Remove an Authorized User

The process for adding an authorized user to a credit card account typically involves contacting the credit card issuer. This can often be done through the issuer’s online portal, mobile app, or by calling their customer service line. The primary cardholder will usually need to provide specific information for the authorized user, such as their full name, date of birth, and address. Some issuers may also request a Social Security Number, though this is not universally required.

After the authorized user is successfully added, a physical credit card with their name on it is often issued and mailed to the primary cardholder’s address. The primary cardholder can then provide this card to the authorized user. To remove an authorized user, the primary cardholder again needs to contact the credit card issuer, which is generally a straightforward process via phone or online. It is advisable to destroy any physical cards issued to the authorized user once they have been removed from the account to prevent further use.