Credit
May 24, 2019

What Happens When You Add an Authorized User to Your Credit Card

Written By Mary Beth Eastman
Last updated November 22, 2019

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One of your financial priorities should be to protect your credit rating. Without good credit, financing a home or getting a much-needed personal loan can be almost impossible. That’s why you should be quite picky when it comes to adding an authorized user to your credit card. Even sharing accounts with your spouse can potentially cause difficulties. Before adding any authorized user to your credit card, you need to consider multiple factors.

Adding an authorized user is as simple as contacting your credit card company. Whomever you are adding is not becoming a joint account holder, so their credit score and other financial information are not necessary. They do not have to qualify for an account. Once they are added as an authorized user, they will be able to charge items to your account whenever they like as long as your account is in good standing and you haven’t exceeded your credit limit. In some instances, you may be able to set a limit on the authorized user’s charges, a good idea if you are afraid they will spend too much.

You may add an authorized user just for the sake of convenience. Perhaps your spouse wants to use an account in your name without becoming a joint account holder. You may also want to add your teenage child as an authorized user so that they can take care of certain expenses without needing you by their side. The process also helps them to build a credit history since most cards report credit information to the major credit reporting companies.

If you have a friend or relative with bad credit, you can add them as an authorized user and help them rebuild their FICO score. Of course, you need to trust them completely to pay their bill on time and not run up the card balance so that they do not have a negative effect on your credit. Remember, they are not legally responsible for the debt – you are.

If you have underused credit cards, adding an authorized user can help your credit by keeping the card open, active and up-to-date.

Fortunately, if the authorized user behaves irresponsibly, you can easily have them taken off your account by placing a phone call to the card company. If they’ve already done damage, you will be responsible for correcting the situation. You will have to pay the debt and deal with any late payments or other credit negatives. If you decide to add an authorized user, be certain to keep close track of their spending and make sure to keep the card’s balance around 30% below your limit in order to protect your own credit rating.

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