What is an authorized user and how does adding one effect my credit score? An authorized user is someone who is authorized to use a credit card by the primary account holder, but not responsible for repayment. The primary account holder can add an authorized user to their credit card account in order to allow access to the credit card account or several years of positive payment history. A common misconception with authorized users is that they are required to be issued a credit card by the account holder. The authorized user does not have to be issued a credit card for the account. In fact, a sizeable portion of authorized users actually don’t have access to the credit card in which they are an authorized user.
Now, the million dollar question is why add someone as an authorized user on your credit card account? Generally an authorized user is someone looking to improve their credit score. They are added to a credit card account where the primary account holder has a good history of on-time payments and low balances from month to month. In turn, if selected correctly by the authorized user they are endowed with the gift of the primary account holder’s payment history and credit line for that particular account which could positively impact the authorized users credit score.
Typically authorized users include; spouses, children, relatives, and very close friends. The reason being that if the primary account owner becomes delinquent it could have a negative impact on the authorized user. On the contrary the primary account holder will not be impacted by the credit history of the authorized user. Now if you decide as the primary account holder to issue a card to your authorized user you are putting yourself at risk of the authorized user making purchases on the credit card and increasing your credit utilization. Be very selective about issuing credit cards to authorized users.