How an Authorized User Can Help (or Hurt) Your Credit Score

If you’re thinking about adding an authorized user to your credit card account, you should know that it can help or hurt your credit score. An authorized user is someone who is not the primary account holder but has been added to the account to help the primary cardholder build credit. Sounds great, right? Well, it can be, but there are also some risks involved. In this blog post, we will discuss how an authorized user can affect your credit score and what you need to know before adding one.

What is an Authorized User?

A primary cardholder is a person who opened the account, and they are responsible for making payments on it. An authorized user is someone else who has been added to the account as an additional cardholder. They aren’t required to make any payments on these cards; instead, their credit score will be affected based on how the primary cardholder manages the account.

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Why Do People Add an Authorized User?

There are a few reasons why someone might add an authorized user to their credit card account. Often, it is for financial responsibility purposes. For example, if you have a young adult child but don’t want them to get their own credit card yet, you might add them to your account as an authorized user. This way, the credit card company will report its activity (both positive and negative) to the three major credit reporting agencies. If they have mismanaged their spending with other cards, this can help them learn better financial habits by using their card responsibly.

Another reason people add a user to their account is to help them build credit. If you are someone who has never had good credit, adding yourself as an authorized user on your parents’ or other family members’ account could be a great way to start building credit.

The Risks of Adding an Authorized User

Adding an authorized user can be risky because that user might make so many charges that the card is maxed out. If a primary cardholder doesn’t pay their bills on time, this can hurt their authorized user’s credit score. Additionally, if the primary account holder defaults on their payments or goes into debt, it will be reflected in the user’s credit report as well.

One of the biggest risks of adding an authorized user is identity theft. If someone gains access to your credit card account information and spends a large amount of money, it can be devastating for both you and the authorized user. Before adding anyone to your credit card account, make sure they have good intentions and will use their debit or credit cards responsibly.

How Adding an Authorized User Can Help Your Credit Score

There are a few ways that adding an authorized user to your credit card account can help build or improve your credit score. The first is by showing the user’s activity on the major three credit bureaus: Equifax, TransUnion, and Experian. If you have been added as an authorized user, but are using the credit card responsibly, this will help you build a more solid credit history.

Another way that adding an authorized user to your account can help your credit score is by removing certain negative factors from your report. For example, if you have several debts that are in collections and one of them has been paid off, it will help you improve your credit score.

Putting Your Cards on Autopay

If you are planning to add an authorized user to your account, there is a good way to ensure they don’t make any charges that you won’t be able to pay off—putting your card on autopay. This way, whether or not your authorized user is making charges, the bill will get paid as long as you set aside enough money in your accounts.

FAQs

How long does it take to build credit as an authorized user?

It will depend on a number of factors, including your existing credit history and the actions of the authorized user. Generally speaking, however, if you are an authorized user and use your card responsibly (i.e., making all payments on time), you should start to see improvements in your credit score within 6-12 months. This can vary depending on your credit report and the actions of the authorized user, however, so it is important to be patient and continue making payments responsibly in order to see improvement over time. Additionally, if you have negative items on your credit report, such as late payments or collections accounts, these may take longer to be removed from your report, which can also affect your credit score.

In order to maximize the impact of adding an authorized user to your account and improve your credit score, it is important to continue making payments on time and using your card responsibly over time. Finally, it is important to remember that the authorized user has no responsibility for your debt. In order to protect yourself from the potential risks associated with adding an authorized user, you should only add someone you trust and who you are confident will use their card responsibly.

Does an authorized user gain credit?

There is no definitive answer to this question, as it will depend on a number of factors including the user’s existing credit history and the actions of the authorized user. Generally speaking, adding an authorized user to your credit card account can help build or improve their credit score in some cases, as long as they use their card responsibly. This can include factors such as making all payments on time and using the card regularly, which can help to build a positive credit history for the authorized user. Additionally, if there are negative items on your credit report, such as late payments or collections accounts, adding an authorized user may help remove these from their report over time.

However, there are also risks associated with adding an authorized user, as they have no responsibility for your debt and cannot be held responsible if you end up falling behind on payments or accruing large amounts of debt. For this reason, it is important to evaluate the trustworthiness and financial responsibility of the authorized user before adding them to your account in order to minimize potential risks.

Is there a downside to adding an authorized user?

There can be potential downsides to adding an authorized user to your account, including the risk of falling behind on payments or accruing large amounts of debt. Additionally, if the authorized user makes purchases that you are unable to pay off, this may have a negative impact on your credit score. For these reasons, it is important to carefully consider the financial responsibility of the authorized user before adding them to your account, as this can help minimize potential risks and maximize the potential benefits.

Additionally, if you are making the decision to add an authorized user, it is important to communicate with them about your expectations and responsibilities in order to establish clear guidelines for using the card. Finally, it is also important to regularly review your credit report and account statements in order to ensure that all charges are legitimate and to take steps to address any issues immediately.

The bottom line

Adding an authorized user to your credit card account can be a useful strategy for building or improving your credit score, as long as you choose the right person and use your card responsibly over time. However, there are also risks associated with this approach, so it is important to carefully evaluate the potential benefits and risks before deciding to add an authorized user to your account. Ultimately, the decision about whether to add an authorized user is a personal one that will depend on your individual circumstances and financial goals. So if you are considering this option, be to do your research and carefully weigh the potential risks and benefits in order to make the right decision for your unique situation.

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