Most credit cards allow the primary cardholder to add another person to the account as an authorized user. Once authorized users are added to the card, they are not required to fill out a credit application.
Authorizing a user can allow them to make purchases and even build credit, but you should be aware that there are some risks involved. This is what happens when you add an authorized user to your credit card.
HOW TO ADD AN AUTHORIZED USER TO YOUR CARD
You can add an authorized user to your account by contacting your credit card company or logging into your online account. Personal information about the authorized user is required, such as their name, address, birth date, and Social Security number (in most cases, an authorized user must be at least 16 years old).
After your request is approved and processed, the authorized user receives a credit card with their name on it to use for purchases. The user’s purchases appear on your monthly credit card statement and in your account.
An authorized user does not increase your credit limit – it is split between all users of the card.
WHAT HAPPENS TO THE USER’S AND THE CARDHOLDER’S CREDIT?
Call the credit card issuer first to ensure that authorized user accounts are reported to the credit bureaus if you are adding an authorized user to help them build credit history. If they do, the credit card account will appear on the authorized user’s credit report and affect their credit score.
Adding an authorized user to your card is a good idea if you maintain a low balance and make all your payments on time. If the account is in good standing, it can appear on their credit report and positively impact their credit score.
Adding an authorized user to your account may not help their credit score if you are having trouble managing the account. Late payments, maxed out credit cards, and accounts in collections can also damage an authorized user’s credit score.
The authorized user’s credit history does not affect the primary cardholder’s credit in any way. Also, adding an authorized user won’t affect your credit, and the authorized user’s name won’t appear on your credit report.
Nonetheless, all activity on your credit card, including purchases made by authorized users, can affect your credit.
WHO IS RESPONSIBLE FOR CARD ACTIVITY?
Adding new users, changing the address, requesting credit limit increases, or closing an account are not possible for authorized users. However, a user with authorization can make purchases on your account, and those purchases are ultimately your responsibility.
As long as you make your card payments on time, you are still responsible. You need to arrange payments with the authorized user if you want them to be responsible for payments. For example, they can pay you directly for purchases made with the card or you can give them access to the account so they can make their own payments.
However, legally, the authorized user is not responsible for the card. If the authorized user racks up a large balance, your credit may suffer. You can be held responsible for any fees if they fail to make a payment, and late payments can appear on your credit report. All credit card debt is your responsibility under the law.
If you add authorized users to your card, you must trust them absolutely and establish ground rules for how the card will be used. Continue to monitor your credit statements after the fact; if the user can’t handle the responsibility, you should probably remove their name from the account or take their card away.
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