How does authorized user work

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There are many ways to improve your credit score. You can open a secured credit card and begin making small purchases and on-time payments. You can look into alternate credit scoring methods that include rent and utility payments along with your credit history. You can keep the credit accounts you currently have, pay off any outstanding debt and watch your score improve as your age of credit increases. People often add partners and spouses as authorized users on their credit cards, for example, and parents sometimes add their teenage children as authorized users to help teens build a credit history and learn how to use credit responsibly.

Authorized users receive credit cards that are connected to your line of credit, but they are not responsible for paying off the charges they make on those cards. The person whose name is on the credit account is fully responsible for all charges made to the card. Choose your authorized users carefully. Being an authorized user can affect your credit in both positive and negative ways—but it can also have no affect on your credit whatsoever.

In order for your authorized user account to affect your credit, the lender or credit card issuer needs to report that account to the three major credit bureaus Equifax, Experian and TransUnion. Authorized user accounts must show up on your credit report to affect your credit score. If they do, you might see your score change as soon as the lender starts reporting that information to the credit bureaus, which can take as little as 30 days.

Once the authorized user account is part of your credit history, it can benefit your credit score as long as both you and the credit account holder use the account responsibly.

If the account holder makes regular on-time payments, for example, you would also get credit for those payments pun intended and your credit score could go up. On the other hand, if you and the credit account holder run up a high revolving balance on the credit account, both of your credit scores could take a hit. An authorized user builds credit when the credit account holder maintains responsible credit habits that help a credit score grow , such as making on-time payments and paying off balances in full.

If the credit account holder is not using the credit card responsibly, you might want to remove yourself as an authorized user from the card. Authorized users will be subject to the credit limit on the card, and the original cardholder may set spending limits for the authorized user if their bank or issuer allows it.

The original cardholder is ultimately liable for charges incurred by an authorized user on their card. A credit check is not required to become an authorized user on someone else's card. Yet banks and card issuers will often report the full payment history of the card, including the names of each individual card user, to the three main credit bureaus: Equifax R , Experian R and TransUnion R. That's how the authorized user approach serves as a credit building tactic.

You don't need good credit or any credit to become an authorized user, but if the bank or issuer reports your card's full on-time payment history to the credit bureaus, you can begin to build a positive credit history.

While being added as an authorized user is not the same as earning credit card approval through a co-signer, they are both options to start your credit history if you have little to no credit. There are some important differences between getting added to a card as an authorized user or signing up for a card with a co-signer:. Does this method require a credit check? Who is legally liable for paying credit card debt? Will payment history be reported to the credit bureaus?

If cardholder cannot pay, co-signer is legally liable for full payment. Ideally, you will find a close relative with excellent credit who is willing to add you as an authorized user. In order to get added as an authorized user on someone else's credit card, the cardholder will need to contact their bank or card issuer and request that you be added to their card account.

They will need to provide some basic information to confirm your identity, as well as your name, Social Security Number, date of birth and contact information. If the cardholder's request gets approved, you will receive a credit card with your name on it that is connected to the original cardholder's account.

That person may opt to set spending limits on your card, depending on whether the bank allows it. Be sure to work with the main account holder so that you can be aware of any rules regarding card usage and specifics regarding payment reimbursement. Being added as an authorized user on another person's card may help you establish a credit history or build your credit. Yet cardholders and authorized users' on-time, late or missed payments will be added to both parties' credit reports, so it's important that cardholders and authorized users see eye to eye.

Be mindful of the following as you consider whether to get added as an authorized user:. As you begin to build your credit history, your experience as an authorized user can help you improve your credit score, but it can also help you understand how credit is maintained. By proactively engaging with your credit, you can grow your credit score as much as you grow your credit knowledge.

Credit score plays an important role in loan approval, apartment applications and more. Here are the top tips on how to build credit with a credit card. Building credit score requires a strategic approach to credit.

Read our top tips on how to build your credit score fast from scratch, from leaning on your family to discovering loans and credit cards available for low credit borrowers. Please review its terms, privacy and security policies to see how they apply to you. Skip to main content Please update your browser. Please update your browser. Credit Cards. Checking Accounts. If a person has no credit, or if their credit score is particularly low, they can potentially raise their credit score by becoming an authorized user of a credit card that the cardholder uses responsibly.

However, if the cardholder does not use the card responsibly and their credit score sinks, this can potentially drag down the credit score of the authorized user. Say a cardholder and an authorized user have a personal agreement that the authorized user needs to pay the issuer directly for any charges made on the card. Building Credit. Rewards Cards. Credit Cards. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.

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