Pros and cons of being an authorized user on a credit card

There are several reasons to become an authorized user on a credit card, although improving your credit score is the most common. Becoming an authorized user can help you build credit by piggy-backing off the primary account holder’s responsible use, and you can get this benefit without applying for a credit card of your own.

Authorized user cards are also common among spouses and partners who want all their credit card purchases to show up on one account, as well as those who want their combined purchases to earn rewards in one place.

No matter the reason, there are pros and cons involved for all parties any time an authorized user is added to a credit card account. Read on to learn the benefits of being an authorized user on a credit card as well as the potential drawbacks.

Pros of being an authorized user

When someone adds you as an authorized user to their credit card account, you will get your own credit card with your name on the front or back. Beyond this convenience, there are other advantages to be aware of.

Build credit with the help of someone else

The main benefit of becoming an authorized user on a credit card is that you can lean on another person’s good credit to build your own. Provided the card issuer reports credit balances and payments for authorized users to the credit bureaus, on-time payments made on the card by the primary cardholder will appear on your credit history and could boost your score over time.

Additionally, the primary user’s length of credit history becomes the authorized user’s length of credit history. That’s one reason parents sometimes add their teenage children as authorized users on their credit cards. They might give them a copy of the card to use for emergencies, or they might keep it tucked away for a few years. Either way, when the child is ready to apply for their own credit card, they already have years of credit history to help them out. Because of this, it’s possible for a credit history to show as older than the person who has it.

You don’t have to get approved for your own card

Becoming an authorized user also lets you avoid having to apply for a card on your own, which is a major benefit if you currently have bad credit or no credit history at all.

As an authorized user, you skip the hard credit pull required for most credit card applications — a step that dings your credit. You could also, as an authorized user, gain access to better rewards or benefits than you could get with your own application and a less-than-excellent credit score.

Boost the family rewards account

Two people using a credit card generally means higher balances, which means rewards tend to accumulate more quickly. If half of your household’s purchases are usually made with debit, combining forces with one rewards card will boost rewards earnings big time. This strategy can help couples earn rewards they can use together, such as cash back to offset a large purchase or travel points for a vacation. Here are some of the best credit cards for couples.

More oversight as you learn the ropes

The primary cardholder is ultimately responsible for the activity on the card account; therefore, it makes sense for them to pay close attention to what an authorized user does with the card.

Some banks allow primary cardholders to place limits on the spending an authorized user can do with the card. Many banks also have alert options that can notify the primary cardholder when the authorized user makes a purchase.

In any case, the primary cardholder can put up “guardrails” for the authorized user to stay between, which should allow the authorized user a safety net of sorts to learn the ropes of using a credit card responsibly before striking out on their own.

Cons of being an authorized user

With every financial decision there are potential pitfalls. Consider these and how you can avoid them before you become an authorized user or add one to your credit card account.

The primary cardholder takes full financial responsibility

First off, you should know that the person who originally had the credit card is solely responsible for all purchases made. This is true even if the authorized user promises to pay off their charges but fails to do so.

At the end of the day, authorized users are not legally responsible for paying off anything they buy with the card. For that reason, it’s important that the primary cardholder trusts the authorized user to use the card responsibly. And even then, there’s a degree of risk. If there’s any question about whether an authorized user can manage the card responsibly, consider not adding them at all, but certainly put in place every needed restriction the card provides.

The good news is that you can always remove an authorized user or lock their card if you’re unhappy with their card usage.

Credit mishaps can hurt your credit score

It’s also important that the authorized user trusts the primary cardholder. Late payments and other credit mishaps can harm the credit scores of both the primary account holder and the authorized user. If you decide to become an authorized user on someone else’s account, make sure you only do so with someone who has a long history of responsible credit use.

This is one reason it’s critically important to ensure you aren’t an authorized user on an account with which you no longer wish to be associated, such as that of an ex-spouse. Primary account holders can wreck the credit of authorized users, so choose your primary account holder carefully.

You won’t earn your own rewards

If you become an authorized user on someone else’s credit card, you should also know that the primary cardholder will get all the rewards. This may not be a big deal if you’re strategically pooling points with a partner or a spouse, but it can be a bummer if you were hoping to earn rewards you could use as you please.

The bottom line

There are several reasons to become an authorized user on another person’s credit card account, but the most common benefit is building credit when you can’t qualify for a credit card on your own.

It’s a good option if you don’t have many others, but there are risks for both parties. Before you become an authorized user, find out if you can qualify for a credit card of your own. The best credit cards for no credit history can offer the credit-building opportunity you’re looking for, too. Consider using Bankrate’s CardMatch tool to see if you’re pre-qualified for a credit card that could help you build credit, earn rewards or both.

Frequently asked questions (FAQ)

• What are some alternatives to becoming an authorized user?

  If you are thinking of becoming an authorized user but you are also considering getting a credit card of your own, you should know that some alternatives exist. For example, you may be able to qualify for a secured credit card if you’re willing to put down a small cash deposit as collateral. You can also consider other credit cards for bad credit or student credit cards that may be easier to qualify for.

• What happens if the authorized user doesn't pay me back?

  The primary cardholder is 100 percent responsible for repaying all purchases made by authorized users on their card. This means that, if an authorized user doesn’t pay you back, you don’t have any recourse.

• How much will my credit score go up if I become an authorized user?

  The benefit to your credit score can vary depending on a whole host of factors. However, there’s a good chance your credit score will improve over time if the primary cardholder makes on-time payments on their card each month.

• Does removing an authorized user hurt my credit?

  Removing an authorized user on a credit card won’t have any impact on the primary cardholder’s credit score. It may decrease the authorized user’s credit score because it will decrease their available credit and their average age of accounts, two main credit score factors.