 Show
Last Updated: October 21, 2022 2 min read Key Points About: Being an Authorized User on A Credit Card
If you’re looking for a way to build credit, becoming an authorized user on someone else’s credit card account could be just what you need. There are no qualifications for becoming an authorized user, and the primary account holder can add you to their credit account in minutes. Still, this approach may not work for everyone. And while asking to be added as an authorized user might sound like a no-brainer, there are potential risks. So, let’s break it down and find out what it means to become an authorized user of a credit card. As an authorized user of a credit card, you have access to the account holder’s credit limit and can use the card to make purchases and payments. Authorized users receive their own credit card they can use to make purchases. However, the primary cardholder is responsible for making all payments toward the card’s balance.
How does being an authorized user impact your credit score?To start building credit as an authorized user, you’ll want to confirm that your credit card issuer reports both the primary and authorized user account details to a credit bureau. Not every major credit card company does. If the primary cardholder pays their bills on time and you both keep your credit utilization (the amount of credit in use) low that positive activity should show up on your credit report. However, if the account holder makes a late payment or misses a payment that also gets documented on the authorized user’s credit report and could negatively impact their credit score. How old do you have to be to become an authorized user?Typically, you must be 15 years or older to be added as an authorized user on a credit card account. Can’t become an authorized user on a credit card?If you don’t have someone who can add you as an authorized user, you may consider applying for a secured credit card. Secured credit cards require a deposit, which acts as your credit limit. Using a secured credit card can help with building credit, and when used responsibly, can lead to a good credit score. The Discover it® Secured Card can help you build your credit history with responsible use.1 If you’re a college student, you can start building credit with a student credit card. Many student credit cards have flexible qualifications. For example, there’s no credit score required to apply for Discover Student credit cards.2 Explore your options to find the best credit cards for you. And with good credit practices, like maintaining a positive payment history, you’ll be on your way to building strong credit. Next steps See if you’re pre-approved No impact to your credit score Check now View all Discover credit cards See rates, rewards and other info Learn more You may also be interested in Was this article helpful? 3375 Thank you for your feedback! Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted. An authorized user is someone you authorize to use your credit card and access other account features. But there could be some negative consequences for you.Adding an authorized user to your credit card account is easy to do, and it can be a great way to help a friend or family member improve or establish credit. Plus it can even help you earn rewards. When you add an authorized user to a credit card, you may be doing that person a huge favor, but you should know some key things before you take the leap. Approval Odds compares your credit profile to the profiles of already-approved applicants or to lender criteria. Explore Cards Now
Depending on your credit card issuer, it may not cost anything to add an authorized user to your credit card account. But note that adding an authorized user could come with an additional annual fee. Simply contact your issuer to add the new user’s information. Typically, that involves verifying a few details, like the authorized user’s name, date of birth and Social Security number. Your authorized user can have a separate credit card to use, but as the primary account holder it’s up to you to decide if you want to give that person that much access to the account. Does adding an authorized user hurt your credit?Adding an authorized user to your credit card account alone shouldn’t have a negative impact on your credit. But keep in mind that if that person uses your credit irresponsibly, negative credit impact could follow. Check out the section below on drawbacks for more information. Benefits of adding an authorized userHelp someone get a fresh startWhen you add an authorized user to your credit card account, information from the account — like the credit limit, payment history and card balance — can show up on that person’s credit reports. That means their credit can improve as a result of being added to a credit account you keep in good standing. For people with no credit or poor credit, or people who’ve had their applications for credit denied, becoming an authorized user can be one of the few ways to start building a better credit profile. Keep in mind that not all issuers provide information about authorized users to the three major consumer credit bureaus — Equifax, Experian and TransUnion. So if your goal is to help a friend or family member improve their credit, ask your issuer whether it reports authorized user account information to the three major consumer credit bureaus. Drawbacks of adding an authorized userCredit mistakes can do damage to both your credit scoresYour positive account information can help an authorized user build, or rebuild, credit. But if you make mistakes, or practice negative credit habits, you could potentially hurt that person’s credit too. If you miss credit card payments or rack up a big balance, both your credit scores and your authorized user’s scores could take a hit. Similarly, if the authorized user makes a mistake, like throwing off your credit utilization or making a late payment on a card connected to your account, it could negatively impact your credit. Shared access to your account informationThe access an authorized user has can vary by card issuer. For example, Discover says that an authorized user can request account information, including copies of the billing statements. That means that person can see information about how you’re using the card, including when and where you’ve made purchases. Additionally, when an authorized user pulls their credit reports, that person may see similar account specifics, like how much you owe on the card and whether you’re current on your payments. Sole responsibility for all chargesAdding authorized users on your account can make it easier to cash in on points or other rewards, but it can also mean taking a bigger financial risk. At the end of the day, regardless of who makes the purchases, you and you alone will be responsible for paying the bill as the primary cardholder. For that reason, it’s important to choose an authorized user you trust to use your account responsibly. Next stepsRemember how intimidating it was to get your first credit card? Maybe it took you a while to learn how to use it responsibly and you made mistakes along the way. Adding someone you trust as an authorized user, maybe your child or another family member, could help that person get off to an easier start. An authorized user can learn good habits, with less risk, while starting to build (or rebuild) a positive credit history. Just remember that it’s a two-way street: An authorized user’s credit habits can impact your credit as well. If adding an authorized user seems like the right option for you, you can contact your credit card company or read your credit card terms to learn if and how you can add someone to your credit card. If, on the other hand, you’re looking to open a joint credit card account with someone else, we have some advice to help you decide if a joint credit card account is right for you. Approval Odds compares your credit profile to the profiles of already-approved applicants or to lender criteria. Explore Cards Now About the author: Sarah C. Brady is a San Francisco–based financial consultant, workshop facilitator and writer. In addition to writing for Credit Karma, Sarah writes for Experian, LendingTree, Magnify Money, MSN News and more. In her … Read more. How much will my credit score go up if I become an authorized user?Being added as an authorized user will not have a significant impact on your credit score, because you're not responsible for paying the bills.
How long does it take for an authorized user to build credit?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.
Does making someone an authorized user help their credit?When you add an authorized user to your credit card account, information from the account — like the credit limit, payment history and card balance — can show up on that person's credit reports. That means their credit can improve as a result of being added to a credit account you keep in good standing.
Does an authorized user get the same credit score?An authorized user can piggyback off the good credit history of the primary cardholder. If the primary cardholder has a long history of making their payments on time and in full, the authorized user should see that positive history reflected on their own credit report.
|
Can you build credit as an authorized user
Related Posts
Copyright © 2024 pauex Inc.
