Adding authorized users to your credit card can be a great way to help someone else build or rebuild their credit.
Adding Authorized Users: How Do You Do It?
Depending on your credit card issuer, it may not cost anything to add an authorized user to your credit card account. But watch out – you could incur an additional annual fee when adding an authorized user.
Your authorized user can have a separate credit card to use, but it’s up to you to decide if you want to give that person that much access to the account.
All you need to do is contact your credit card issuer to add an authorized user.
How Does Adding Authorized Users Impact Your Credit?
When you add an authorized user to your credit card account, information from the account can show up on that person’s credit reports. That means their credit can improve if the information is positive, simply as a result of being added to an account you keep in good standing.
It’s important to pay your credit card bill on time, keeping your account balance low, and keeping your credit card account open over a long period of time. For people with no credit or poor credit, becoming an authorized user can be one of the few ways to start building a better credit profile.
Don’t Make Credit Mistakes
Your positive account information can help an authorized user build, or rebuild, credit.
But if you make mistakes, or practice negative credit habits, you could potentially hurt that person’s credit too.
If you miss credit card payments or rack up a big balance, both your and your authorized user’s credit can take a hit.
Similarly, if the authorized user racks up charges on your card it could negatively impact your credit.
You Are Still Responsible
Adding authorized users on your account can make it easier to cash in on points or other rewards, but it can also mean taking a bigger financial risk.
At the end of the day, regardless of who makes the purchases, you are responsible for paying the bill. Choose authorized users you trust to use your account responsibly.
Adding someone you trust as an authorized user, maybe your child or another family member, could help that person get off to an easier start.
An authorized user can learn good habits, with less risk, while starting to build or rebuild their positive credit history.
Just remember that it’s a two-way street: an authorized user’s credit habits can impact your credit as well, both positively and negatively.
