Most credit card issuers let you add an additional person, such as a child or employee, to your credit card account without requiring that this person actually apply for the credit card themselves. This additional user is called an authorized user.
The authorized user receives a credit card with their name on it, and they can use the card just the same as if they were the primary account holder. All purchases the authorized user makes go to the same account and appear on one credit card statement. The authorized user shares the credit limit with the primary account holder and their purchases reduce the amount of credit available to both users.
Unlike a joint account holder, an authorized user doesn't have to go through a credit check to be added to the credit card account. Some credit card companies may charge a fee for adding authorized users, while some rewards credit cards offer a bonus if you add an authorized user to your account.
Authorized User Permissions
The authorized user receives all the credit card privileges of the primary account holder, but has no legal responsibility for purchases made on the account. If there's ever a lawsuit regarding debts on the account, the authorized user won't be included, even if that person was responsible for the purchases.
Authorized users can make a payment on the account, even though they're not required to.
For safety, authorized users can't perform account maintenance activities such as adding other authorized users, changing the address on the account, requesting a credit limit increase, or negotiating a lower interest rate.
Credit History Impact
The credit card account history could show up on the authorized user’s credit report if that credit card issuer reports authorized user accounts to the credit bureaus. That's great if the account has a positive payment history, and bad if the credit card payment has a history of late payments or maxing out the limit.
If an authorized user account is not showing on your credit report, there's a good chance that credit card issuer, as a policy, doesn't report authorized user accounts to the credit bureaus. A quick call to the card issuer's customer service can let you know whether you can expect the authorized user account to show up in your credit history and with which bureaus.
After the subprime mortgage crisis of 2007, FICO score calculations were updated to give less weight to authorized user accounts overall, and also to exclude authorized user accounts added for the sole benefit of a credit score boost. For example, if a person pays a credit repair service a fee for authorized user accounts, FICO scores will likely not consider that account for calculating a credit score.
Adding an Authorized User
To add an authorized user, contact your credit card issuer by phone or by logging on to your online account. The card issuer will need the authorized user's personal information, including their name, address, date of birth, and social security number, to process the request.
The company may impose a limit on the number of authorized users you can add to your account. And it's probably for the best—the more people with spending access to your credit card, the harder it is to keep track of the charges.
Some credit card issuers allow you to set different spending limits for each authorized user on your account. Often this is as easy as logging into your account and changing each person's limit.
Removing an Authorized User
Dissolving the authorized user relationship is almost as easy as starting it. Simply call the credit card issuer or log on to the primary account holder's online account and request to remove the authorized user. The user's credit card will be deactivated and they will no longer be able to make purchases.
Frequently Asked Questions (FAQs)
How long does it take for an authorized user to see an impact on their credit score?
Credit scores update whenever there is new information. As soon as your credit card company reports the authorized user to credit bureaus, the score could update. Whether a score updates or not depends on any other activity in the report. Negative information elsewhere could cancel out the positive information of an added line of credit.
What benefits do you get when you add an authorized user to your credit card?
Most of the benefits will be for the authorized user that's added, rather than the primary cardholder. Authorized users can help keep a card account active, and their spending could help to hit any welcome offer thresholds. Aside from those small perks, the rest of the benefits are for the authorized user.