Will Adding an Authorized User Help Their Credit?

An authorized user is an individual that can make purchases using your credit card account. However, unlike a joint account holder, they’re not legally responsible for paying back the debts that either of you incurs.

Notably, in addition to giving them access to your credit line, adding someone as an authorized user can help their credit. Here’s everything you should know about the process, including how it works, the risks, and the alternatives.

How Does Adding an Authorized User Help With Credit?

For people that manage their credit cards well, adding an authorized user to their account can help build the authorized user’s credit significantly. 

A credit score is essentially the numerical output of a proprietary formula. Adding someone as an authorized user can help their credit score by positively influencing several variables in that formula. For example:

• Payment history: Authorized users generally aren’t responsible for paying back the debts they incur, but they usually still get credit for it. As a result, making monthly payments on time for the shared account helps them build a positive payment history and improve their credit score.

• Amounts owed: Much like maintaining a positive payment history, authorized users will benefit from a low credit utilization on the accounts you share with them. If you can keep the amount you owe to less than 10% of the card’s total spending limit, it should help their credit.

• Length of credit history: When you add an authorized user to your credit account, the age on their credit report is the same as yours. For example, if you open an account in 2005 and add them in 2020, it’s as if they held it since 2005 too, and a longer credit history is always beneficial to their credit score.

• Credit mix: Last but not least, adding an authorized user to your account adds a revolving credit account to their credit report. Having a diverse mix of installment and revolving debts is beneficial to their credit score.

Fortunately, adding an authorized user to your account doesn’t require a credit check for either party. That means it can’t do any harm to the fifth and final factor in your credit scores, new credit activity.

All that said, adding an authorized user to your account is only an opportunity to build a good credit score. If you or the authorized user misuses the card, both of your credit scores can suffer.

Start Building credit today

Risks of Adding an Authorized User

When you add someone to your credit account, there are undeniable risks to you as the primary cardholder and the newly authorized user. Let’s look at the potential downsides for both parties, starting with the primary account holder.

First and foremost, there’s the risk that the authorized user could spend money that they’re not supposed to spend. After all, they can use your credit line as much as they want with no responsibility to pay whatever credit card debt they incur.

They could max out your credit card if they wanted to, and you’d still be the only party liable for the balance. Not only is that a financial risk, but it also represents a significant risk to your credit score.

The two most significant factors in your FICO score are your payment history and amounts owed. An authorized user has the power to negatively affect both by racking up balances and neglecting to pay them.

That’s why so much trust goes into adding someone to your account and why so many people only do it for their children. Even then, it’s common to refrain from giving them a copy of the card or even informing them.

Next, let’s discuss the risk to the authorized user. They don’t have any financial downside, but there’s no guarantee adding them to the account will improve their credit either.

If either of you makes a mistake with the shared account, it will typically hurt both of your scores. For example, missing one of your monthly payments or inflating your credit utilization will cost you both.

Because of these risks to both parties, it’s a good idea to sit down and make sure everyone is on the same page before adding anyone as an authorized user.

Just like you would with a joint credit card, confirm how much each person can spend and who’s responsible for paying what.

Can You Remove an Authorized User?

Fortunately, adding an authorized user to your account is never permanent. If you want to revoke their status, you always have the option to remove them from your account.

This method varies between credit card companies, so check your provider’s website to confirm the easiest way to do so.

For example, Chase lets you add authorized users online as long as you have their name, date of birth, and address, but you’ll have to call their customer service if you want to remove someone.

If you’re removing an authorized user because they’ve abused their privileges, you probably don’t care what it will do to their credit. However, if you’re thinking of doing so because your child has become independent, know that it could hurt their score.

When you remove an authorized user from your credit card, it can affect their credit in one of two ways. The credit card company may stop reporting the account’s activity, or its history could disappear from their report altogether.

Either one can have a negative impact on their score by weakening their payment history, increasing their credit utilization ratio, decreasing the age of their credit accounts, or reducing their positive credit history.

If you’re still on good terms with the person you have as an authorized user, consider checking in with them and discussing whether it’s a good time to remove them.

Need Help Building Your Credit the Right Way?

Adding an authorized user can be a great way to build credit—but it's just one piece of the puzzle. If you're looking for personalized guidance on improving your credit score, securing business funding, or making strategic financial moves, I’ve got you covered.

Let’s create a plan tailored to your goals. Book a free 15-minute strategy call today! 👉 Schedule Your Consultation Now

Take control of your financial future—your credit journey starts here!