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An authorized user is a person who is added to a primary account holder’s credit card account. They are issued a separate card for making purchases, but all charges remain the responsibility of the primary account holder.
“The authorized user should be someone you can trust and who you can have open, honest conversations with,” says Matt Schulz, chief credit card analyst for LendingTree (TREE) , an online lending marketplace. “That’s because the primary cardholder is the only one who is legally responsible for any balances on the card. That means if the authorized user runs up a big bill and doesn’t pay it, the bank will come after the primary cardholder instead.”
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Here’s what you need to know about becoming an authorized user and what it means to add someone to your account.
Related: How much credit card debt do Americans have on average?
How does being an authorized user on a credit card work?
There are plenty of reasons someone might choose to add an authorized user to their account despite the potential risk of being stuck with the charges. Current laws require credit card applicants to be at least 18 years old and have a source of income. So a parent or guardian might add their child as an authorized user to help them build their credit or to simplify household spending. Or a small business owner may choose to make their employees authorized users so they can easily make business purchases.
To add someone as an authorized user, you can log into your online account or call customer service. Requirements typically include the person’s name and birthdate, but sometimes a Social Security number might also be required. There’s no credit check required for authorized users since the main cardholder is liable for all charges made on the account.
Those with big families or several employees should ask their card issuer if there’s a limit on how many authorized users can be added to an account. The limit can vary by issuer and whether it’s for a personal credit card or a small business account.
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Removing someone or yourself as an authorized user is just as simple. You can contact the card issuer by calling the number on the back of your card and ask to be removed, or have the primary cardholder request your removal. Oftentimes, this can also be done online.
“Generally speaking, when you’re removed as an authorized user from a card, that card will no longer appear in your credit history. That’s one reason why it is so important for people to begin getting credit solely in their own name as early as possible,” Schulz says.
How does being an authorized user affect your credit?
The account holder and the authorized user must be careful when using the account. Being added to someone’s account as an authorized user can help you benefit from the primary cardholder’s good payment behavior and length of credit history, which are both important factors in building a strong credit profile.
Related: Americans tally record high credit card debt — how it affects you
But your credit report will only benefit if the credit issuer reports authorized user accounts to the three major consumer credit bureaus: Equifax, Experian and TransUnion. If the primary goal of being added to someone’s account is to improve your credit, first make sure the issuer reports authorized user accounts.
It’s also important to keep in mind that if the primary cardholder has a less-than-stellar credit history, that can cause more harm than good to your credit since their missteps will also affect what’s reported to the credit bureaus.
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The reverse is true for those adding an authorized user to their card. You should only add someone you can trust as you run the risk of someone running up a big bill and failing to pay it, which can cause personal and financial strain.
“You must clearly articulate the expectations around the card and the consequences that will come if things go awry. It might make for awkward conversation, but it is way better to do it sooner rather than later,” says Schulz.
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