6 Things You Must Know Before You Add an Authorized User to Your Credit Card 6 Things You Must Know Before You Add an Authorized User to Your Credit Card
Stop! Before you add another user to your credit card account, beware of these six things that could affect your credit score. 6 Things You Must Know Before You Add an Authorized User to Your Credit Card

When you add another user to your credit card account, your positive credit history gets reported on their credit history as well. As a result, adding a loved one as an authorized user on your credit card can be a smart way to help that person build their own credit score up over time. When you love someone, it’s only natural to want to help them in any way you can – even if that means putting your own credit on the line.

6 Key Facts to Know Before You Add an Authorized User to Your Credit Card

Before you do though, you should know what this really means. Adding another user to your credit card account may seem harmless, but there are plenty of ways for this situation to turn ugly in a hurry. Here are all the main details you should know before you volunteer your credit to help someone else:

Your authorized user will get their own credit card with their name on it

When you add an authorized user to their credit account, your card issuer will send them a card with their own name on it. Just like you, they’ll be able to use their card to make purchases up to their credit limit.

You will be held jointly and individually responsible for any charges made on the account

Since both of your names will be on the account, you’ll both be responsible when it comes to paying off your balance. If the person you added as an authorized user fails to hold up their end of the bargain and doesn’t pay off their portion of any charges made, you’ll be responsible for paying them.

The history on your credit account will be recorded on both of your credit reports

The account an authorized user was added to will now be reported to both of your credit reports. If the history on this card and account continues to be positive, it should affect both of your scores in a positive way. Likewise, using this account irresponsibly, making late payments, or going over your credit limit could negatively impact both of your credit scores from this point forward.

Your positive credit history can improve your authorized user’s score, but their credit history won’t affect yours

Here’s some positive news. While responsible use of the credit card you now hold jointly with your authorized user can help both of you establish a positive credit history, that’s where the connection between you and your authorized user ends. If they happen to have poor credit or some negative reporting on their credit history that happened in the past, it won’t affect your credit score at all.

You can set limits and alerts to protect yourself

Most credit cards allow you to set limits on your new authorized user’s personal credit card, plus alerts that can let you know any time they use it. If you’re worried your authorized user might go hog wild with their new card, try setting some limits and alerts on their account – at least at first. By setting them spending limit fairly low – at say, $300 – in the beginning, you can let them ease into this new arrangement and give them time to prove themselves. And by making sure you’re notified with an alert any time they use their card, you can monitor the situation closely at all times.

You can remove an authorized user, but you’ll still be responsible for the damage they cause

If adding an authorized user becomes an issue in your life, it’s fairly easy to remove them from your account. Simply call your card issuer, inform them of the situation, and have their card shut down. Their card will be closed at that point, and denied at the register should they try to use it. And within 30 days, this change should be reflected on both of your credit reports.

But that doesn’t get you off the hook for any damage they cause. If they manage to run up a balance before you close their account, you’re still on the hook.

Final Thoughts

Adding an authorized user on your credit card account is one way to help someone you love boost their credit over time, but your generosity will come at a cost. Make sure you know all of the risks before you put your credit on the line to help someone out. If your authorized user runs up a balance and refuses to pay it back, your kindness could cost you dearly.

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Holly D. Johnson

Holly D. Johnson

Holly Johnson is a financial expert and award-winning writer with an obsession towards frugality, budgeting, and travel. In addition to serving as Contributing Editor for The Simple Dollar, Holly writes for U.S. News and World Report Travel, Personal Capital, LendingTree, and Frugal Travel Guy. Holly is the owner of the websites Club Thrifty and Travel Blue Book.

  • Julie@ChooseBetterLife

    This is such a tricky issue. If a person can’t qualify for his/her own card, then it’s probably better not to have them linked to yours. The only person I’ve added is my husband, since all our money is in the same pot anyway.