Does being an authorized user build credit?
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Updated 9:31 a.m. UTC May 9, 2024
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Becoming an authorized user on someone else’s credit card might help you establish or build up your own credit. This is useful if you have no credit history or you’re rebuilding a damaged credit score. Once your credit score improves due to responsible activity on a family member’s or friend’s account, it could be easier to qualify for a credit card of your own. But it pays to consider the pros and cons, as well as a few alternatives, before becoming an authorized user.
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What is an authorized user on a credit card?
An authorized user is someone who gets added to a credit card account by the primary cardholder (and the primary cardholder is the person who owns the account).
The authorized user might receive a credit card connected to the account that they can use for purchases. Depending on the card issuer, the authorized user also might be able to review the account’s transaction history, dispute charges and request a cash advance or balance transfer.
An authorized user’s purchases get added to the account’s total balance owed and should earn rewards for the primary cardholder — if it’s a rewards credit card. However, the primary cardholder is ultimately responsible for paying what is owed on the account and also may be the only one who can redeem the rewards.
How to build credit as an authorized user
Becoming an authorized user might help you build credit because it:
- Adds a new account to your credit reports. Credit card issuers often report credit card accounts to the three major consumer credit bureaus — Equifax, Experian and TransUnion — under the authorized user’s name.
- Increases your length of credit history. The account’s entire history could be added to your credit reports, potentially increasing the average age of your credit accounts and the age of your oldest account. Both elements factor into your length of credit history, which affects your FICO Score. The longer your history, the better.
- Can build a positive payment history. New on-time payments could be added to your credit reports, improving your payment history, which is the biggest factor affecting your credit scores.
- Affects your utilization ratio. The account’s credit utilization ratio can also impact your credit scores. Your utilization is the percentage of available credit being used, as it appears on your credit reports. A lower utilization ratio, ideally less than 30%, is best for your score. Note, utilization only considers revolving credit accounts such as credit cards, not installment credit like a mortgage or an auto loan.
How being an authorized user can hurt your credit
Being an authorized user can also hurt your credit scores in certain circumstances.
For example, if the account has a high balance, the resulting high utilization ratio might hurt your credit scores. Also, if the primary cardholder misses their credit card payment, the late payment could be reported to the credit bureaus under your name.
Some credit reporting agencies, such as the bureau Experian, omit missed payments and other negative information from authorized users’ credit histories — which is a big plus from the authorized user’s perspective.
And, if a credit card account is hurting your credit scores, you can ask the card issuer to remove you from the account. If the account still appears on your credit reports once you’ve been removed, you can dispute the late payment (or entire account) with the credit bureaus.
How to become an authorized user
You can only become an authorized user if a primary cardholder adds you to the account.
The primary account holder may need to enter your name, address, Social Security number and date of birth. Card issuers have varying age requirements — some don’t have a minimum age requirement, while others require authorized users to be 13 or 15 years old, for example.
Because the primary cardholder is ultimately responsible for paying the credit card bill, there are no credit check, minimum credit score or income requirements to become an authorized user. This makes authorized user cards a potentially helpful option if you’re new to credit or rebuilding your credit.
Thinking about helping your kid build credit early? Here are the details about adding your child to your credit card account.
Who can benefit from becoming an authorized user?
Becoming an authorized user offers several potential benefits, and you might want to become an authorized user if:
- You’re establishing or building credit.
- You have trouble qualifying for a credit card on your own.
- You share finances with the primary cardholder.
- You want the perks that come with a specific credit card, such as travel protections on purchases.
For example, a parent might add their child as an authorized user and give them the credit card with instructions to only use it in an emergency. Or, you might add your partner as an authorized user if you want to put all your household purchases on a single credit card account.
It’s also a useful tool for spouses when one partner recently moved to the United States and is trying to establish their U.S. credit history. Additionally, someone might add a different family member or close friend to their card if that person is trying to rebuild their credit.
No matter the arrangement, the primary account holder and authorized user should have an open and honest discussion about the expectations for the account.
If the only goal is to build credit, the authorized user might agree to never carry or use their authorized user card. Credit card issuers report the entire account to the credit bureaus — they don’t separate out the primary and authorized user’s usage. So the authorized user can benefit even if they don’t use or even physically have access to the credit card.
Pros and cons of being an authorized user on a credit card
Many people use authorized user accounts to build credit or help them manage family expenses, but there are pros and cons to consider.
Pros
- Get a new credit card without having to apply or qualify on your own.
- Receive eligible cardholder benefits that come with the card.
- Potentially improve your credit history and credit scores.
Cons
- You don’t have complete control over the account.
- An authorized user account might hurt your credit scores in some situations.
- You might not receive all the cardholder benefits or be able to use the account’s rewards.
Alternatives to becoming an authorized user
Becoming an authorized user isn’t the only way to establish or improve your credit scores. Some popular alternatives include:
- Credit-builder loans: Credit-builder loans require you to put the loan’s proceeds into a locked savings account. Your loan payments get reported to the credit bureaus, which can improve your credit scores. Depending on the arrangement, you might use the locked savings to make your monthly payments. Or, you might unlock the entire amount once you pay off the entire loan. In this case, having a credit builder loan essentially forces you to save money, which can be a plus.
- Secured credit cards: You may be able to get a secured credit card with bad credit or no credit. However, you will need to pay the card issuer a refundable security deposit, usually a few hundred dollars, which typically determines your credit limit. Although many secured cards have high interest rates and some charge an annual fee, they can be a good option if you want a credit card of your own for rebuilding credit. Plus, many issuers will allow you to graduate to an unsecured card after demonstrating responsible card use.
- Unsecured credit-builder cards: Some card issuers offer unsecured credit cards for building credit. For example, with specific cards, you might be able to get approved by linking your bank account and allowing the issuer to analyze your banking history instead of your credit history. When considering an unsecured card for bad or limited credit, be sure to evaluate the terms and conditions carefully. If the issuer charges a lot of fees, such as an account setup fee or an authorized user fee, you’d likely be better off avoiding that card and applying for a secured card with a reputable bank instead.
Making on-time payments with accounts like those mentioned above — and maintaining low utilization ratios with any credit cards — can help build up your credit. And as your credit scores increase, you may become eligible for better loan offers and credit cards with more attractive terms, benefits and rewards.
Frequently asked questions (FAQs)
Some credit card issuers have a minimum age requirement for authorized users, which is usually around 13 to 15. But others don’t have a minimum age, and you can add a young child to your account to help them establish their credit history.
However, some credit card issuers won’t report the account’s activity to the credit bureaus under the authorized user’s name until they turn 18. The credit bureaus also might not create a credit report for someone until they turn 18. But once the authorized user turns 18, the account’s entire history can help them start adult life with good credit.
Being an authorized user can help or hurt your credit in several ways. It might help your credit if the entire account’s history is added to your credit report, if the primary cardholder makes on-time payments and if the card has a low utilization ratio. It might hurt your scores if a late payment from the account winds up on your credit history, or if the cardholder consistently carries a high balance.
The timing depends on when the credit card issuer reports the account to the credit bureaus and when the bureaus add it to your credit file. Generally, card issuers send an update at least once every billing cycle — approximately every 28 to 31 days. So, it could take around a month or two for the account to appear on your credit report.
You won’t know the exact impact of becoming an authorized user on your credit scores because your credit depends on many factors. For example, the type of credit score, the specific credit report being used and the other information on your credit report will affect the resulting score. The new credit card account’s payment history and utilization ratio can also affect your credit scores.
But, in general, becoming an authorized user on a credit card that has a long credit history, on-time payments and a low utilization ratio can boost your credit scores.
Your credit score might decrease if the authorized user account lowers the average age of your credit accounts, adds late payments to your credit history or has a high utilization ratio.
If this happens, you can ask the credit card issuer to remove you as an authorized user and stop reporting the account to the credit bureaus in your name. You could also dispute the account with the credit bureaus to try to get it removed from your credit report once you’re no longer an authorized user on the account.
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