Can being an authorized user build credit?

Summary

• Being an authorized user on someone else’s credit card could help you build credit.
• Authorized users can typically use the card, but the primary cardholder generally remains responsible for repayment.
• Certain account activities, like on-time payments, may strengthen your credit profile, while others, like high balances, may weaken it.
• Setting clear expectations could help reduce confusion around spending, payments and account access.
• Secured credit cards, credit-builder loans and rent-reporting services may offer other ways to build credit.

Becoming an authorized user could help you build credit, especially if the account has a history of on-time payments and a low balance. However, you want to understand how the arrangement typically works and what responsibilities come with it before you opt in. This guide covers the basics to help you decide if being an authorized user is the right credit-building strategy for you.

What is an authorized user?

An authorized user is a person the primary cardholder adds to their credit card account. Depending on the card provider’s rules, authorized users may receive a card in their name to use for purchases. Some providers also allow other transactions, such as cash advances, but the rules vary.¹ The primary cardholder generally remains responsible for repaying the account balance.

If the card provider reports authorized users to credit bureaus, positive account activity could help them build credit.

How do you become an authorized user?

The process for becoming an authorized user varies by card provider. However, if a card provider allows authorized users, the process almost always starts with the primary cardholder. That person needs to contact the provider and submit an authorized user request, often through online banking or a mobile app.

Requesting an authorized user typically requires the cardholder to provide your basic information, such as:

• Name
• Address
• Date of birth
• Social Security number
• Contact information

Once the card provider has the required information, the provider typically processes the request and may mail a physical card with your name on it to the primary cardholder’s address.

Credit card providers often have their own rules about authorized users. For example, authorized users on U.S. Bank credit cards must be at least 13 years old. U.S. Bank also doesn’t pull credit reports when processing authorized user requests. Other card providers could have different requirements.

How being an authorized user helps build credit

As an authorized user, you could benefit from a well-managed account. This may happen if the credit card provider reports authorized users to all three major credit bureaus: Experian, TransUnion, or Equifax²

When a card provider reports authorized users, credit-scoring models from FICO® and VantageScore® may use the account when generating your credit score. Account activity that helps the primary cardholder’s score typically helps yours, including:

• On-time payments. Payment history is a major factor in your credit score. If the primary cardholder consistently pays the account on time, that positive history could help your credit.
• Low credit utilization. Credit utilization compares the amount you owe to your available credit. Being added to an account with a low balance and a higher credit limit could lower your overall credit utilization.
• A longer credit history. Being added to an older account may increase the average age of the accounts on your credit report.
• A broader credit mix. If you have a limited credit history, being added to a credit card account could add revolving credit to your credit profile.

In general, being added to an open account with a positive payment history and manageable balances could strengthen your overall credit profile. Just remember that not all credit card providers report authorized users to the credit bureaus. Before being added as an authorized user, check the card provider’s policy to make sure the effort is worthwhile.

Risks of being an authorized user

The potential benefits of being an authorized user could become drawbacks if the account isn’t managed responsibly. Missed or late payments and high balances may be reported to the credit bureaus, which could hurt your credit score — even if you didn’t make the charges or miss the payment. Similarly, the benefit you get from the account history could diminish if you’re removed.

You also don’t have control of the account. The primary cardholder could change your spending access, carry a balance or close the account without your approval.

Sharing access to a credit card could also create relationship issues. Tensions may rise if you and the primary cardholder aren’t clear about spending limits or repayment expectations.

You could reduce some of these risks with communication. If you become an authorized user on someone else’s credit card, take the time to outline expectations before you start using the card.

Alternatives to becoming an authorized user

Being an authorized user isn’t the only way to build credit. Here are a few other options to consider.

• Get a secured credit card. A secured card requires a refundable deposit that typically serves as your credit limit. Before applying, make sure the card provider reports account activity to the credit bureaus.
• Try a credit-builder loan. With a credit-builder loan, you make monthly payments throughout the life of the loan and typically receive funds at the end of the term.³ Review any fees or interest before choosing this option.
• Sign up for a rent-reporting service. A rent-reporting service reports your on-time payments to one or more of the major credit bureaus. There are similar services for reporting on-time payments for other eligible bills.

Secured credit cards may also be a good alternative when you’re looking to rebuild your credit. The key is to manage the secured card and any current credit card debt responsibly. For current debt, that usually means making at least your minimum payment by the due date each billing cycle and paying more when you can to help reduce your balance.

Is becoming an authorized user right for you?

You may build credit by becoming an authorized user on an account that has a strong payment history and low credit utilization. But the arrangement isn’t without risk, especially if late payments or high balances are reported to the credit bureaus. Before you’re added, make sure you understand how the card provider reports account activity and agree with the primary cardholder on how the account will be used.