you'll often be asked if you want to add any authorized users to your account. Adding an authorized user can be a way to earn additional rewards or help a trusted friend or family member improve their credit, especially if they've been denied credit before.
What is an authorized user on a credit card?
An authorized user is someone that you add to your account who is allowed to make purchases on your account.
Being a joint cardholder and a cosigner are other ways that you can share account access with someone, but they differ from adding an authorized user in a few key areas:
1. When you add an authorized user, you, as the primary cardholder, are solely responsible for the debt, while both parties are responsible for the debt in the other cases.
2. On the plus side, you can remove an authorized user from an account at any time, which you can't do as a joint cardholder or a cosigner.
3. Also, while the other cases require a credit check, you can avoid a credit check completely when you add an authorized user.
Authorized user vs. joint credit card vs. cosigner
| Authorized User | Joint Cardholder | Cosigner |
Who is responsible for the debt? | Primary cardholder | Both cardholders | Both the primary borrower and the cosigner |
Credit check required? | No | Yes, for both cardholders | Yes, for both the primary borrower and the cosigner |
Can you remove the user? | Yes, at any time | Not without the lender's permission | Not without the lender's permission |
Does being an authorized user build credit?
Being an authorized user can potentially build credit, especially for teenagers or young adults who may not have had many opportunities to show responsible credit usage.
Without any history to go off, many lenders will not approve credit applications. An authorized user account gives lenders a credit history to go off of. This can open up additional opportunities for accessing credit and lower interest rates.
Note, your credit card issuer must report the account to the credit bureaus, and lenders must use a credit scoring system that incorporates authorized user accounts. There are a multitude of credit scores employed by different lenders, and some scores may not include authorized-user activity in determining your creditworthiness.
Furthermore, an authorized user will most benefit from an account with a long history of timely payments. On the other hand, an account with a lot of missed payments could actually negatively impact your score. If that happens, you can contact the credit bureaus. Some credit bureaus, like Experian, will remove delinquent authorized user accounts from your credit report, since you are not legally responsible for the debt. Experian also reports that they generally do not include negative payment history on an authorized user's account, but other credit bureaus may include this information.
Which credit card companies report authorized users?
Most of the biggest credit card issuers in the United States report additional users to all three credit bureaus: Experian, Equifax and TransUnion.
In most cases, you'll need to provide the authorized user's date of birth and SSN for the credit bureaus to update their file. American Express, Bank of America and Discover, for example, require this information in order to add an authorized user. Chase, on the other hand, doesn't require an SSN to add an authorized user (though a date of birth is required).
How much can being an authorized user help your credit?
Being an authorized user on the credit card of a responsible user can make a big impact on your credit score. This is especially true if you are a young adult who doesn't have many other entries in your credit report.
Should you add your child to your credit card to build credit?
Most issuers will allow you to add a child so long as they are at least 13 years old. In fact, there is no restriction on who you can add as a user — even if that person is below the age of 18. There are currently no regulations requiring that the authorized user be a family member, even if they are a minor.
There are clear financial benefits to your child if you add them as an authorized user. As long as the card issuer reports these users to one of the three credit bureaus, then adding your child to your credit card account will make it appear on their credit file. Also, you should only add children to accounts with good payment histories — an account with a lot of late payments on record could negatively impact your child's score (for credit bureaus that include that information in their credit report).
Normally, young adults need to apply for student credit cards or credit cards for users with no credit. By adding the child to your account, a score will be generated for them, helping them qualify for better cards as well as making their loan terms more favorable. For example, having a high credit score can qualify your child for a lower APR and higher rewards.
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