In this article:
- What Is an Authorized User?
- Will Being Added as an Authorized User Help My Credit?
- What Are the Risks of Being an Authorized User?
- How to Become an Authorized User
- Other Ways to Build Credit
Becoming an authorized user on someone else's credit card account can be a great way to establish or improve your credit history, provided the primary owner of the account has good credit management habits and solid credit scores. Here's what to know about becoming an authorized user and how it can help you begin building credit.
What Is an Authorized User?
An authorized user is a secondary account holder on a credit card. Authorized users receive a card with their name on it, and the account's credit limit and payment history will appear on the authorized user's credit report. This can give them a jump-start in establishing or building a credit history.
As an authorized user on a credit card, you can make purchases with the card (assuming the primary account owner agrees), but you are not responsible for paying the bill each month. The primary account holder will be able to see all your transactions and may ask you to reimburse them for charges, but they are solely responsible for making monthly payments on the account.
Who Can Be an Authorized User?
In many instances, a card owner can name anyone as an authorized user, including minor children. Some card issuers set a minimum age for authorized users, such as 13, but many card issuers have no minimum age requirement.
Because the primary cardholder assumes responsibility for all charges made by authorized users, no credit application is required of an authorized user, nor are they subject to eligibility requirements such as credit checks or income declarations.
Will Being Added as an Authorized User Help My Credit?
Becoming an authorized user is typically most beneficial for new credit users or for individuals with credit scores that have been hurt by negative entries on their credit reports, such as late payments, recent bankruptcies or foreclosures. Becoming an authorized user can help your credit several ways, provided that:
- The primary user who adds you to their account has a strong, well-established credit history, and
- The issuer of the card in question reports account information to all three national credit bureaus (Experian, TransUnion and Equifax)—something you can verify by contacting the issuer.
Assuming these conditions are met, here are some of the ways your credit can benefit from becoming an authorized user:
Establish or Extend Payment History
Payment history is the single most important influence on credit scores, responsible for about 35% of your FICO® Score☉ , the score used by 90% of top lenders. When an account to which you've been added as an authorized user appears on your credit reports, so does its payment history. If you are a relatively new credit user, an authorized-user account can add years of payments to your credit history, and if those payments were all made on time, they can benefit your credit scores significantly.
Reduce Utilization Rate
The percentage of your available revolving credit tied up in outstanding balances is known as credit utilization rate, and it's responsible for about 30% of your FICO® Score. Credit scoring systems such as the FICO® Score and VantageScore® consider the utilization rate for each of your credit cards and other revolving accounts, as well as your total utilization—the sum of all your revolving credit balances as a percentage of the sum of your credit limits. If any of those rates exceeds about 30%, it can tend to hurt your credit scores.
If you have balances on credit cards of your own, adding an authorized user account with a high credit limit and/or a low balance could lower your utilization rate and benefit your credit score: The total amount of credit available to you will increase by the amount of the unused credit on the card (and your total outstanding balance will increase by the amount of any balance on the authorized-user account).
Here's an example of how that could work. Let's say you have two credit cards in your own name: Card A has a $2,000 credit limit and an outstanding balance of $300, while Card B has a $3,000 credit limit and an outstanding balance of $900.
Utilization on Card A is $500 / $2,000 = 25%
Utilization on Card B is $800 / $3,000 = 27%
Total utilization = ($500 + $800) / ($2,000 + $3,000) = $1,300 / $5,000 = 26%
In this situation, credit utilization rates on both cards and your overall utilization rate are nearing the 30% guideline.
Here's how your credit utilization rate would be affected if you were added as an authorized user on Card C, with a $10,000 credit limit and a balance of $1,000:
Utilization on Card A is $500 / $2,000 = 25%
Utilization on Card B is $800 / $3,000 = 27%
Utilization on Card C is $1,000 / $10,000 = 10%
Total utilization = ($500 + $800 + $1,000) / ($2,000 + $3,000 + $10,000) = $2,300 / $15,000 = 15%
Becoming an authorized user doesn't affect the balances on your other cards, but, in this example, it causes overall utilization rate to drop significantly—even though the balance on the authorized-user card is greater than the one on either of your own cards.
Add to Age of Accounts
Length of credit history, a measure that sums up your longevity and experience as a debt manager, accounts for about 15% of your FICO® Score. It's a calculation that encompasses the number of months since you opened your oldest credit account, the number of months since you opened your most recent account and the average ages of all your active credit accounts.
All other factors being equal, a credit user with a lengthy age of accounts will tend to have higher credit scores than one with a shorter age of accounts, so becoming an authorized user on an account that's older than any of your other ones could benefit your credit scores.
What Are the Risks of Being an Authorized User?
There are at least two potential drawbacks to becoming an authorized user on someone else's credit card: one involving the primary cardholder's credit habits, and the other concerning your own.
Inherited Missteps
Sharing a credit card with a less-than-reliable credit user could hurt you: If the account owner missed a scheduled payment by 30 days or more in the recent past (or might do so in the future), their credit scores will likely suffer and yours could as well.
Experian doesn't include negative information such as late payments on authorized users' credit reports, so in this scenario, credit scores based on your Experian data wouldn't hurt you—but scores based on data from other credit bureaus might. Credit utilization, however, is noted on your reports and could have a positive or negative effect.
If a friend or loved one offers to make you an authorized user on their account, consider asking if they will let you see their credit report first, to make sure you're not going to inherit a checkered account history. If that's not possible, choose someone you know is very responsible with money and credit (and remember, you can always remove yourself from the account if you choose).
Resisting Temptation
Becoming an authorized user can mean a major increase in your credit limit, and all that newfound purchasing power can be hard for some people to resist. A major buying spree that runs up the utilization rate on the card could have negative consequences for the primary cardholder's credit, for your relationship with the cardholder and, possibly, for your own credit.
If you have trouble setting boundaries on your buying urges, be sure to talk with the primary cardholder about spending guidelines and consider becoming an authorized user on someone's card that allows the primary owner to set spending limits for authorized users.
How to Become an Authorized User
If you'd like to build your credit by becoming an authorized user on someone else's credit card, here's one approach:
- Ask to be added as an authorized user. Ask a loved one with a strong history of good credit management to add you to their account.
- Find out about fees. If the card has an annual fee, it would be a good gesture to offer to cover a portion of it in appreciation of the owner's sharing the account with you. Some cards also charge fees for adding authorized users and you should at least offer to cover them, if applicable.
- Establish spending boundaries. Have a conversation with the primary cardholder about how you'll use (or not use) the card. Will you have a monthly spending limit? A maximum total balance? Should you get permission for charges in excess of a certain amount? Clear communication about what spending is authorized will help you remain a well-regarded authorized user.
- Be clear about payments. Make sure you and the primary account owner understand how payments will work. If you will be responsible for your own purchases, will you cover them by making payments directly to the card issuer or by transferring funds to the primary account owner? How will you handle purchases you cannot pay in full in a single pay period (and the interest charges on them)?
- Monitor your credit scores. As you gain experience as an authorized user, check your credit scores regularly to track your credit-building progress.
- Make a graduation plan. As your credit improves, think about getting a credit card in your own name and easing out of the authorized-user relationship. You can't know exactly how large a credit limit you'll get on your own card until you apply for it, but you can get a good estimate by seeking prequalification from a number of issuers or through Experian, which can show credit card offers based on your FICO® Score. Before you ask the primary owner to remove you from the authorized-user account, make sure you understand how its absence will affect your credit utilization. You can stay on the account indefinitely if you and the primary account holder agree.
Other Ways to Build Credit
In addition to becoming an authorized user, these are proven techniques for building credit, whether you're a new credit user or aiming to recover from a misstep or mishap that hurt your credit:
- Secured credit card: If your credit history is too new or your credit scores too low to qualify for a credit card of your own, you can build credit with a secured credit card. To get a secured card, you'll put down a cash deposit that serves as some or all of your credit limit. (If you fail to pay what you owe, the card issuer can keep the deposit.) Charging purchases and repaying them, just as you would with an ordinary card, helps you establish a positive payment history and promotes credit score improvement.
- Credit-builder loan: A credit-builder loan can fortify credit scores and help you save some money. You borrow a modest sum, such as $300 to $3,000 depending on the financial institution, and the cash is placed in an inaccessible interest-bearing account. If you fail to make your payments (with interest), the lender keeps the money, but if you keep up with the installments over the loan's term, the payment history can benefit your credit scores and the contents of the account will be yours. Just make sure the lender reports payments to all three credit bureaus to benefit your scores the most.
- Credit-building debit card: The can help you build credit without debt by linking to Experian Boost®ø, which gives you credit for eligible bill payments after three months of payments. See terms at experian.com/legal.
Frequently Asked Questions
Yes. While lenders do not perform credit checks on authorized users, they may have policies that prevent them from approving one. For instance, a card issuer could deny authorized-user status to an individual with a history of lawsuits against the company, or simply someone too young to meet their age authorized-user age requirement.
If you're the primary owner of a credit card account, you can remove an authorized user at any time, for any reason. Many cards' mobile apps and web portals let you remove (and add) authorized users with a few clicks. You can also call the customer service phone number on the back of your card and ask to have an authorized user removed.
As with any new credit, it typically takes a month or two after you've been named an authorized user for the account to appear on your credit reports. As soon as that happens, the card's shared payment history and its age of accounts will be added to your own and will be reflected in your credit scores.
If there's a history of late or missed payments on the account you've been added to, or if that account has a balance that exceeds about 30% of its credit limit, it will tend to lower the credit scores of the primary account holder—and potentially yours, as an authorized user. That's why it's important for credit-building purposes to seek an authorized-user relationship with someone who has strong credit habits. It's also important, when sharing an account, to be aware of other users' charges, to avoid unintentionally excessive balances.
The Bottom Line
Becoming an authorized user on a credit card account owned by an experienced, reliable credit manager can be a great way to jump-start your credit history (or rebuild one that's seen better days). If you establish clear ground rules with the primary cardholder and are careful to manage the account wisely, becoming an authorized user can benefit your credit significantly. You can see the impact an authorized user relationship has on your credit by regularly checking your FICO® Score free from Experian and tracking its progress over time.
