Does Being An Authorized User Build Credit? (2024)

There are many ways to build your credit when you’re starting from scratch or trying to bounce back from past financial mistakes. One strategy that might help you is becoming an authorized user on someone else’s credit card account.

Research shows that nearly half of authorized users typically have a credit score of 680 or higher—a score that’s considered good according to Experian. Although the authorized user strategy works well for many consumers, it’s not always as straightforward as it seems.

Piggybackingon someone else’s credit card might help you build credit, but sometimes it won’t help you at all. And in certain unfortunate situations, being an authorized user could actually backfire and send your credit scores sliding downward instead.

What Is an Authorized User?

Being an authorized user means you have a credit card in your name that’s attached to someone else’s account. Because you’re not the primary account holder, you’re generally not responsible for the charges made on the card—at least not in the eyes of the card issuer.

As an authorized user, you can use a credit card to make purchases. However, you do not have the authority to make changes to the account. For example, you can’t request a credit limit increase or add other authorized users. That power lies with the primary account holder.

Be careful not to confuse authorized user status with having a joint credit card account with someone else. With a joint credit card, you apply for the account alongside another person like a spouse or parent. If the card issuer approves your application, you and your co-borrower are equally liable for any charges made to the account.

How To Become an Authorized User

The process of becoming an authorized user on someone else’s account is relatively easy. It starts with your family member or friend reaching out to their credit card company over the phone or online to make the request. From there, your loved one gives the card issuer your name and some personal information like your date of birth and Social Security number.

Once the card issuer approves the request, it will mail a credit card in your name to the primary account holder. At that point, it’s up to your loved one to decide whether to give you the credit card to use or hang onto it for safekeeping. Parents, for example, might want to hold on to the card and only give it to their son or daughter to use at specific times.

With most credit cards, adding an authorized user is free. Yet some card issuers may charge fees to include authorized users on your account (this practice is more common with premium rewards credit cards). Adding an authorized user to The Platinum Card® from American Express will cost you $195 per year (for up to three authorized card holders – Terms Apply. See rates & fees). With the Chase Sapphire Reserve®, you’ll pay $75 per year for each authorized user you add to your account.

How Does Becoming an Authorized User Affect Your Credit?

Being an authorized user on someone else’s account could affect your credit. And although there’s a solid chance your credit rating could benefit from becoming an authorized user, whether it ultimately does or doesn’t is largely out of your control.

1. Being an Authorized User Could Help You Build Credit

Let’s take a look at the best-case scenario first. When a loved one adds you as an authorized user onto an existing account, the action might give your credit score a boost.

In order for an authorized user account to potentially help your credit, three things need to happen:

• The card issuer needs to report the account to the three major credit bureaus.Many credit card issuers do report account activity for authorized users to Equifax, TransUnion and Experian. However, be careful not to assume this is the case. You should review your three credit reportsaround 60 days after becoming an authorized user to verify whether the account shows up.
• The account needs to be free of negative payment history.Late payments on a credit card, even from a few years ago, aren’t a good look from a credit scoring perspective. In fact, the payment history on your credit reports (authorized user accounts included) has more influence over your credit scorethan any other factor. If a loved one is going to do you a favor and add you as an authorized user, you should ask them to please add you to an account with zero late payment history.
• The credit utilization rate on the account should be low.FICO and VantageScore, the two major credit score brands in the United States, both use credit scoring models that focus a lot of attention on your credit utilization ratio. Credit utilization is a term that describes how your credit card balances relate to your credit limits. If your credit reports show an authorized user account with a high balance relative to its credit limit, it could be bad for your credit scores even if all of the payments are on time. It’s generally good to aim for a credit utilization under 30%.

Asking your loved one to add you to an older credit card account could potentially give your credit score an extra boost. Older accounts tend to be better for your credit scores thanks to the way scoring models work.

2. Being an Authorized User Might Not Impact Your Credit

Credit scoring models only consider information that’s currently on your credit report—nothing more and nothing less. So, in order for a credit card to affect your scores, it must show up on your credit reports with Equifax, TransUnion and Experian. If a card issuer doesn’t report authorized user activity to the credit bureaus, being added to the account won’t impact your credit in any way.

Thankfully, many card issuers do report authorized user activity to the major credit bureaus. The primary account holder can ask about the company’s credit reporting policy when he or she calls to add you to the account.

3. Being an Authorized User Could Hurt Your Credit

There are a few situations where piggybacking on a loved one’s credit card account might hurt you. Your credit score could be in trouble if the primary cardholder:

• Pays the bill 30 days late or worse
• Runs up a big balance relative to the credit limit on the account
• Receives a credit limit decrease from the card issuer (triggering a higher credit utilization rate)

Note: Experian states that it does not include negative payment history on the credit reports of authorized users. So, your Experian-based credit score might be fine even if the primary account holder pays late. Equifax and TransUnion, however, both warn that negative payment history on authorized user accounts could hurt both you and the primary account holder.

Remember, as an authorized user you’re not legally liable for the debt. So, if the primary account holder pays late or runs up a big balance relative to his or her credit limit, you have the option to be removed from the account. A phone call or online request to the credit card issuer is often all it takes to remove yourself from an account. Some card issuers, however, only allow the primary account holder to make this request.

Once you’re no longer an authorized user, the credit card company should ask the credit bureaus to delete the account from your credit reports. However, if the account continues to show up on your reports after you’re removed from it, you can also dispute the mistakewith the credit bureaus on your end.

Read more: Credit Cards For Bad Credit

Risks of Being an Authorized User

If you’re comfortable asking someone you trust to do you a favor and make you an authorized user, there’s minimal risk involved with giving the authorized user strategy a try. Becoming an authorized user on a well-managed credit card could help you build good credit, even if you’re starting from scratch. And in the event something goes wrong, you or your loved one have the option to call the card issuer and remove the authorized user from the account.

The primary account holder, on the other hand, will be accepting more risk than the authorized user. He or she will be legally on the hook for any charges an authorized user makes on the credit card account. If your loved one is worried about accepting this responsibility, he or she could opt to keep the physical card instead of handing it over to you when it arrives. Alternatively, some credit card companies let cardholders set individual spending limits for authorized users.

Finally, remember that having a friend or family member add you to an existing credit card is just one step in a credit-building journey. It’s still important to establish credit on your own. As you open accounts and develop good credit management habits yourself, there’s a good chance your credit scores will continue to climb.

Bottom Line

Authorized usership is a great and relatively safe way to build credit with the help of a more creditworthy trusted family member or friend. Becoming an authorized user comes with the same responsibilities of card ownership, but can be rewarding in terms of both opportunity to strengthen credit and access to cards with better rewards and benefits.

To view rates and fees for The Platinum Card® from American Express please visit this page.

Frequently Asked Questions (FAQs)