When it comes to building credit, becoming an authorized user on an account can be helpful if you don’t have much, or any, credit history of your own. You’ll be able to start using credit without having to apply for a brand-new account, while benefiting from the primary cardholder’s responsible credit usage.
What is an authorized user?
An authorized user is a secondary cardholder on a credit card account. As an authorized user, you may receive your own credit card and account number, but you aren’t ultimately responsible for payment like the primary cardholder is (they can view all purchases you make). You may decide to reimburse the main cardholder for any balance you put on the card or not to use the card at all. You’ll still be able to take advantage of the positive payment history and length of time the account has been open.
How does being an authorized user help credit?
If you have little or no credit history, becoming an authorized user gives you a jump-start. When someone you trust adds you as an authorized user to their credit card, a new account will appear on your credit report.
All the characteristics of the original account will have an impact on your credit history and potentially on your credit score. You’ll benefit the most by joining an account that has been open a long time, has a spotless payment history and has a low credit utilization rate, meaning a small percentage of the total available credit is being used.
But for those factors to benefit you, the credit card issuer must report authorized-user activity to the credit bureaus. If reported, your credit history must incorporate that activity, and it must be included in calculations of your credit score.
What are the risks of being an authorized user?
If the primary cardholder misses a payment or maxes out their card, your credit could be negatively affected. Some credit bureaus do not include negative payment history in an authorized user’s credit report but others may.
Can an authorized user be removed?
The primary account holder can remove an authorized user at any time by contacting the credit card company. Authorized users may also remove themselves, depending on the credit card company.
If you’ve been removed from an account as an authorized user but the card activity still appears on your credit report, you can ask the credit bureaus to dispute it with the card company. You can generally start a dispute online and get updates on the process via email.
For more information about understanding and building credit, see the following articles: