Adding someone to your credit card account as an authorized user can help them build or rebuild their credit. But you also need to protect your own credit along the way.
Here’s what you need to know before entering into this arrangement.
The primary cardholder holds all responsibility
When you add someone as an authorized user, they can have their own card with their name on it. They can make purchases, but it’s up to you to make sure they pay for those expenses.
You can have them pay you directly. You might also give them online access to the account so they can make payments directly to the card issuer from their own bank account.
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But legally, an authorized user isn’t liable for any charges or balances. Ultimately, the account balance and total responsibility of the card lies with you, the primary card holder.
Obviously, you need to be able to trust whomever you’re considering adding to your card. You should also have a plan in place for how they’ll actually use the account—and make payments on it.
What happens to the authorized user’s credit?
While authorized users aren’t responsible for purchases, the account will show up on their credit history. The credit limit, card balance and payment history for that card will show up under their name, just like it will on your own credit report.
While the primary cardholder—you, in this case—is responsible for the account, any mistakes you make that damage your own credit will also affect the authorized user’s credit, and vice versa.
If the primary user ends up missing payments or accumulating too much debt, the authorized user can remove their name from the account.
An authorized user’s credit history won’t affect yours
While you are responsible for the purchases and activity of the authorized user on your account, simply adding them to your account won’t affect your credit one way or another.
Their name, and the fact that you’ve added them as an authorized user, will not show up your report at all. But their behavior could affect your credit. For example, if your authorized user has past debt unrelated to your credit account, that won’t impact your own credit report or score. But if your authorized user’s spending habits rack up a considerable balance on the account you share, you could see your score drop.
Overall, there is some risk in adding an authorized user to your credit card account, but it comes from their financial behavior. Seriously consider their financial habits in making your decision, and put guidelines in place for their using and making payments on the card.
This post was originally published in 2015 and was updated on May 28, 2020 by Lisa Rowan. Updates include the following: Changed featured image, checked links for accuracy and linked to related Lifehacker content, updated formatting to reflect current style, revised the article for length and clarity.
