As a primary account holder, you can choose to add authorized users to your credit card to help build their credit history. Authorized users can make purchases using the credit card linked to the account, and their actions are reported to credit bureaus. However, while you may come up with a plan for payments together, only the primary cardholder is required to cover the bill.
An authorized user is an individual added to a credit account by the primary account holder. By piggybacking on the account, the authorized user’s credit score can benefit from the primary user’s financial actions — provided they make consistent on-time payments.
Authorized users can make purchases with the credit card but aren’t liable for repayments. Only the primary cardholder is required to make payments on the credit card.
A primary cardholder may add an authorized user to help manage household expenses among family members or to help someone start building their credit, such as a child or spouse. The addition of an authorized user on a credit card must be approved by both the primary cardholder and the card provider.
Authorized users are typically family members or close friends of the primary cardholder. However, anyone can become an authorized user as long as they meet the card’s requirements, such as age and citizenship status. The primary cardholder also needs to authorize the addition.
If you’d like to add your child to build their credit, check the minimum age requirement with your financial institution. Some providers, like Chase and Bank of America, have no minimum age requirement, while others require a minimum age of 13 or older, including American Express and Discover.
Teaching your child to understand credit and borrow responsibly can be a great financial decision, so consider credit cards tailored for teen users.
If the card provider reports the added user to credit bureaus, their credit score should improve — provided that on-time payments are made and credit utilization is kept low. If this is the authorized user’s first account, it will also start building their credit history.
If you have a rewards card, having multiple cardholders might help you reach certain goals or milestones faster than if you were each charging purchases to separate cards.
However, because multiple people are using the account, miscommunication or overspending may be more common. Authorized users are not legally obligated to make payments on the card. If they rack up debt or max out the card, it becomes the primary cardholder’s responsibility. Any negative action, like missed payments, can harm both credit scores.
In some cases, the primary cardholder may be able to place a spending limit on the authorized user’s card.
The primary cardholder must contact their financial institution to add someone as an authorized user. Some providers allow you to add users via their online portal or app, while others require a phone call. A fee may be involved, so ask if you’ll be charged for adding someone to your credit card.
Once the authorized user is approved, they’ll have the option of receiving their own card. Keep in mind that an authorized user is not required to have a card, and children may not qualify to receive one. However, simply being on the account — with or without a card — builds their credit history.
The following tips can help establish healthy financial habits and a positive credit history, as well as avoid the potential pitfalls of adding an authorized user.
You may need to remove an authorized user from your account if your relationship with them has changed, they aren’t paying you back, or they have bad spending habits and are hurting your credit. Usually, the primary cardholder needs to contact the financial institution to remove the authorized user from the card. In some cases, the authorized user may be able to remove themselves.
Some card providers allow you to remove an authorized user through their online portal or app. With others, you’ll need to call the number listed on the back of your card. Contact your specific provider to see how it removes users from cards and follow the steps it provides.
Before removing an authorized user, consider how this will affect their credit report. If they have little history, removing them from the card can harm their credit score.
Adding an authorized user to your credit card can help them bulk up their credit report, improve their credit score and increase their chances of being approved for other funding in the future. It can also simplify finances between family members.
However, discussing a plan is important so you’re not overspending and risk exceeding your credit utilization or falling into debt. And if you don’t want to add an authorized user to your credit card, there are other ways to build credit history.
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