Authorized User

What Is an Authorized User?

An authorized user is a person who has been added to another individual’s credit card account by the primary account holder. As an authorized user, you typically receive a card linked to the account and may make purchases, but you are generally not legally responsible for repaying the debt. The primary account holder retains full responsibility for all balances and payments.

Why It Matters for Your Credit

Being added as an authorized user may help build or improve your credit history, particularly if you have a limited credit file or are just starting out. Most major credit card issuers report authorized user account activity to the three major credit bureaus, including on-time payment history, credit utilization, and account age. These factors can positively influence your credit score over time, as long as the primary account holder manages the account responsibly.

It is worth noting that the relationship works both ways. If the primary account holder misses payments or carries a high balance, that negative activity may also appear on your credit report, potentially lowering your score. Choosing a trusted person whose account to join is generally an important consideration.

A Practical Example

Consider a parent who adds their college-aged child as an authorized user on a credit card that has a long, positive payment history and a low balance. The child’s credit report may begin reflecting that account, giving them a head start on building a solid credit profile, even if they never use the card directly. This arrangement is a common strategy for helping young adults establish credit responsibly.

Key Things to Keep in Mind

• Authorized users typically do not sign a credit agreement and are generally not liable for the debt.
• Not all lenders report authorized user activity to credit bureaus, so it may be worth confirming the issuer’s policy.
• The primary account holder can typically remove an authorized user at any time.

Sources

Consumer Financial Protection Bureau (CFPB). “How do I get and keep a good credit score?” consumerfinance.gov. Accessed 2024.

Consumer Financial Protection Bureau (CFPB). “What is a credit report?” consumerfinance.gov. Accessed 2024.