What is the Effect of Having an Authorized User on Your Credit Card?

Did you know that many credit card companies will allow more than one person to use the card for purchases?  There are two primary ways this is done: via joint credit cards, and when a primary card holder allows another person to use the card, which is called an authorized user. The difference seems subtle,…
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Did you know that many credit card companies will allow more than one person to use the card for purchases?  There are two primary ways this is done: via joint credit cards, and when a primary card holder allows another person to use the card, which is called an authorized user.

The difference seems subtle, but in fact, it is very important. With a joint credit card, both parties are responsible for the charges. With an authorized user, only the primary card holder is responsible for the charges, even though someone else may make charges. This sounds like a bad situation to be in, and it can be when it is abused. But it can also serve a purpose and is a common situation for parents who want to give their teen access to a credit card.

Let’s take a look at how this works and the pros and cons of having an authorized user on your credit card.

What is the Effect of Having an Authorized User on Your Credit Card?

How an authorized user affects the primary card holder. The immediate concern for most primary cardholders is how allowing an authorized user might affect their credit score. The good news is the authorized user’s credit report, credit score, payment history, debt, and other factors will not affect the primary card holder’s credit score and history. The authorized users’ credit history doesn’t show up on the primary card holder’s history at all. That said, all charges made by either user are the legal responsibility of the primary credit card holder.

How being an authorized user affects the authorized user’s credit. The authorized user may experience a boost in his or her credit score based on the primary card holder’s on-time payments and length of credit history.  On the other hand, it can also cause an authorized users’ credit score to drop if the primary card holder makes a payment late. it is important to note that not all credit card companies report authorized users to the credit bureaus and not all credit bureaus count credit history from being an authorized user toward the authorized user’s credit score.

Negative Effects to an Authorized Users’ Credit Report

When the banks report information about a credit card, it will report to all three of the major credit bureaus for both the primary card holder and the authorized user of the credit card. Experian will only include positive information on the authorized users’ credit report for shared credit cards. Equifax and TransUnion will list both positive and negative notations on the shared credit card account on the authorized users’ credit report.

FICO credit scores, the score most used by lenders when determining a borrowers level of risk, are calculated using all the information on your credit report.  This includes information reported on credit cards where you may only be an authorized user.  So if the primary card holder of that account is making payments late or not at all, your FICO score is going to decrease as a result of that activity.

Positive Effects to an Authorized Users’ Credit Report

One of the reasons many people become an authorized user on another person’s credit card is to help improve their credit score.  For example, a college student might be added as an authorized user on their parents credit card.  Their credit score will then reflect the credit history of the card, which means it will appear the student has been making payments on a credit card for much longer than he or she really may have.  Provided the parents have a good history of making payments on time, the college student will have a higher credit score than they would have without being an authorized user on their card.

Risks of Allowing an Authorized User on Your Account

The most important thing to remember regarding authorized user’s is this: They have no legal responsibility for the charges they make on the primary credit card holder’s account, making this a risky proposition for the primary credit card holder. Allowing authorized users on your credit card account should only be done when you know and implicitly trust the authorized user.

The best example is allowing a teen to use a parent’s credit card as an authorized user. If you decide to allow an authorized user on your account, be sure to use this as an opportunity to teach them about how credit cards work and how their charges will affect their credit history and credit score.

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About Ryan Guina

Ryan Guina is The Military Wallet's founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Illinois Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.

Featured In: Ryan's writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

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  1. Clay says

    If I become an authorized user of my mother’s cap 1 card and the payment history and age of that account are good, I assume it will be good for improvement of my score.
    Question is:
    Can other debt, collections, negative items etc, associated or tied to her but non related to the cap1 card negativity affect my score.

  2. Michael Hamm says

    My parents added me as an authorized user on there home depot account without my permission. Now their debt shows on my credit report. How is that legal?

    • Maria P Padilla says

      You contact the Credit bureau and tell them you were a minor and didnt consent. Dispute it then sendthe credit card company a letter. Basically they cant sue you you were a minor. Cancel the card in your name if you are no longer a minor it will all go to your parents.

  3. Susan slay says

    Can an authorized use of a Lowe’s credit card account or even the primary card holder purchase gift cards and cash a prepaid gift card in for cash? Prepaid credit cards charged to a Lowe’s account cashed in for money to gamble at the casinos with monies charged to Lowe’s credit card account and the authorized person does the same to spend the cash he wants. Primary card holder dies but before she dies the credit card goes into debt collection.

    • Ryan Guina says

      Hello Susan, This is outside my level of expertise and is something that needs to be addressed with the credit card issuer or a lawyer. I wish you the best with this situation.

    • Maria P Padilla says

      Oh yes an authorized users account does show up on your credit report. Namely Lowes. Now it shows I use up 123% of my income on credit. No bueno. Steer clear of any Syncrony credit cards they will ruin you for life. Also opt out of any 3rd party inquiries on your credit reports. Tje credit reporting agencies will sell your info. They have been since 1913. Dont believe me. Go look up Retail Credit Company on the California Secretary of State. Guarantee you won’t like what you see

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