What Is a Credit Card Authorized User?

An authorized user is someone who has official permission to use another person's credit card but isn't legally responsible for paying the bill. An authorized user gets added to the primary cardholder's account and can make purcꦦhases as if it were their accou♉nt.

For personal cards, authorized users are often family members, such as a child or a spouse. Benefits to an authorized include a potential boost to their 澳洲幸运5官方开奖结果体彩网:credit score. Discover how authorized users work, including some pros and cons of being or adding an authorized 🧔user to a credi🧜t card account.

How Being an Authorized User Works

An authorized user is a person who is allowed access to another cardholder's credit card account. Cardholders must apply to add an authorized user to their accounts. Once the primary cardholder gives permission, the authorized user may get their own 澳洲幸运5官方开奖结果体彩网:credit card and monthly statement.

Other credit card issuers might only allow the authorized user to make purchases with the primary account holder's card. In general, anyone can be an authorized user, although some banks impose minimum age limits.

Authorized User Credit Check

Authorized users are not usually subject to a 澳洲幸运5官方开奖结果体彩网:credit check since they are 澳洲幸运5官方开奖结果体彩网:not liable for the charges to the credit card. In other words, the primary cardholder may expect the authorized user to cover the costs of their purchases, but the primary cardholder is ultimately liable for all of the charges on the card.

For example, if one member of a couple is an authorized user on the other's 澳洲幸运5官方开奖结果体彩网:credit card and they split up, the cardholder is legally responsible for covering any charges, regardless of who made them.

Authorized Users and Payments

Authorized users sometimes opt to pay the cardholder whatever they owe on the card so that the primary cardholder can pay 澳洲幸运5官方开奖结果体彩网:the balance. Or, the primary cardholder may give them access to the card's online account so they can 澳洲幸运5官方开奖结果体彩网:make the payments themselves. In some cases, such as when a 澳洲幸运5官方开奖结果体彩网:child is an authorized user, the cardholder may s𒀰imply pay the entire balance o﷽n their own.

Authorized users typically don't receive a monthly statement (or bill) for the credit card, but the statement may break out their charges separately.

Limits for Authorized Users

In addition, authorized users are limited in what they can do with the card. For example, issuers generally don't allow authorized users to add another authorized user, change the account address or PIN, request a change to the 澳洲幸运5官方开奖结果体彩网:credit limit or interest rate, or close the account.

Generally speaking, primary cardholders can't impose spending limits on authorized users through the card issuer, although they can agree to limits among themselves. Some 澳洲幸运5官方开奖结果体彩网:American Express cards are an exception to this rule, allowing primary cardholders to set a limit as low as $200 for their authorized users—澳洲幸运5官方开奖结果体彩网:American Express calls them additional card members.

✤How Being (or Having) an Authorized User Affects Your Credit Score

Becoming an authorized user can help your credit score if you manage your finances properly and the creditor reports your activity to the credit reporting agencies. Your 澳洲幸运5官方开奖结果体彩网:credit score is a three-digit number that reflects your creditworthiness, and any positive 澳洲幸运5官方开奖结果体彩网:credit history as an author🐓ized user can help you. However, there are drawbacks to being or adding an authorized user.

Helps Build Your Credit History

An individual might become an authorized user on another person's credit card to build or rebuild their credit. If someone has little or no credit history—called a 澳洲幸运5官方开奖结果体彩网:thin file—becoming an authorized user provides access to a credit card and can establish a financial track record. Students and new graduates𒊎 often find themselves in this situation.

Improve Odds of Getting Approved for New Credit

A 澳洲幸运5官方开奖结果体彩网:low credit score can make it challenging for someone to get approved for a card independently. Becoming an authorized user can help them 澳洲幸运5官方开奖结果体彩网:boost their credit score to an acceptable range, allowing them to get 澳洲幸运5官方开奖结果体彩网:approved for new credit.

However, before becoming an authorized user, be sure the credit card issuer will report your information as an authorized user to the major 澳洲幸运5官方开奖结果体彩网:credit bureaus. If they don't, being an authorized user will not affect your credit.

Improve Your Credit Utilization Ratio

Being an authorized user and getting added to a cardholder's account with high 澳洲幸运5官方开奖结果体彩网:credit limits can help the authorized user improve their 澳洲幸运5官方开奖结果体彩网:credit utilization ratio. Cr𒀰edit utilization reflects how much debt you have compared to your credit availability and greatly impacts your credit score.

If you have maxed out your credit cards, you'll have a low credit utilization ratio. Conversely, the ratio improves if your debt balances represent a small portion of your 澳洲幸运5官方开奖结果体彩网:available credit. A 30% credit utilization ratio is considered favorable, meaning your total debt represents 30% of your overall credit availability.

For example, if a cardholder has one credit card with a $1,000 credit limit and a balance of $700, their 澳洲幸运5官方开奖结果体彩网:credit utilization ratio is 70% (or $700 ÷ $1,000) *100. However, let's say the borrower gets added as an authorized user to a cardholder with a $6,000 credit limit and zero debt. As a result, the authorized user's 澳洲幸运5官方开奖结果体彩网:credit utilization ratio improves since their available 澳洲幸运5官方开奖结果体彩网:credit increases to $7,000 wi🅠th $1,000 in debt for a credit utilization ratio of 14% (or $1,000 ÷ $7,000) *100.

🔯We multiplied the results by 100 to convert th❀e decimal to a percentage. The example assumes that all credit information from the authorized user is reported to credit agencies.

Can Also Hurt Your Credit Score

On the downside, if either the authorized user or primary cardholder gets into financial trouble with the card—such as charging a considerable amount of debt or b🥀ills they cannot pay, both credit scores can get dragged down.

Just as primary cardholders need to be careful in taking on an authorized user, would-be authorized users need to be sure they aren't tying their financial fate to someone apt to make their credit even worse.

Authorized User vs. Joint Account

Adding an authorized user to a credit card isn't the only way two people can share an account. You can also open a joint account.

The principal difference between these two arrangements is that with a 澳洲幸运5官方开奖结果体彩网:joint account, the credit scores of both parties will be considered when applying and, if approved, will both be legally responsible for repaying the debt.

Other Alternatives to Authorized User

People who are having difficulty getting a credit card on their own also have a couple of 澳洲幸运5官方开奖结果体彩网:other alternatives:

Add a Co-signer

A 澳洲幸运5官方开奖结果体彩网:co-signer adds their name to a credit card and agrees to be 澳洲幸运5官方开奖结果体彩网:legally responsible for the debts if the other person defaults. However, many card issuers no longer accept 澳洲幸运5官方开奖结果体彩网:co-signers, making it challenging to add a co-signer. Co-signing remains common with mortgage loans and car loans.

Apply for a Secured Credit Card

澳洲幸运5官方开奖结果体彩网:Secured credit cards are designed for people with poor credit or limited credit history and work diffe𝓀rently from traditional, unsecured cards. With a se𝕴cured card, a person places funds on deposit with a bank affiliated with the card issuer, which serves as collateral for the credit card.

The cardholder can use the card for transactions like a traditional card but can't spend more than the total on deposit. After using secured credit and consistently making on-time payments for some time, cardholders may qualify for an unsecured card. Secured cards and secured personal loans are widely available from the major card issuers.

The Bottom Line

Becoming an authorized user or adding one to your account can have several benefits, such as making a credit card available to someone who 澳洲幸运5官方开奖结果体彩网:might not otherwise qualify. Becoming an authorized user caওn boost your credit score and build your credit history. However, primary cardholders sh🍎ould remember they are liable for the bill if the authorized user defaults on the payments.