What you need to know about being an authorized user on a credit card

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Should you be an authorized user?

Are you considering becoming an authorized user on someone else's credit card? This option might seem appealing if you don't have a credit card. But before you jump in, let's break down what being an authorized user means and whether it's the right move for you.

What is an authorized user on a credit card?

Think of an authorized user as a “guest star” on someone else’s credit card. The primary cardholder invites you to the party, giving you your own card linked to their account. You can make purchases, but your control over the account is limited. In exchange, you benefit from the primary account holder’s strong credit.

Christopher Fred, head of Credit Cards and Unsecured Lending at TD Bank, explains it this way: “A primary account holder applies for and gets approved for a credit card. Their credit history determines if they get the card, what credit line they get, and what interest rate they'll pay.”

He adds, “Authorized users can be added to the account during the application process or anytime after. Usually, there's no credit check for authorized users, and almost everyone who asks to be an authorized user gets a card.”

Why become an authorized user?

There are a few reasons why you might want to be an authorized user: 

1. Convenience: You can share a card with a family member without the hassle of joint ownership. 
2. Credit boost: Parents may add their kids as authorized users to help them build credit early. 
3. Credit repair: If you're working to improve a less-than-ideal credit score, becoming an authorized user can allow you to benefit from the primary account holder's positive credit history.

April James, Member Solutions Manager at Redstone Federal Credit Union, notes, “Parents may add their children as authorized users to kickstart a positive credit history, sometimes even before high school graduation. But this approach often comes with strict guidance on responsible credit card use.”

How being an authorized user can help your credit

When you're an authorized user, the credit bureaus see your account activity just like they do for the primary cardholder. With responsible use, you can start building a history of on-time payments and low credit utilization, which can boost your credit over time.

Choose your primary cardholder wisely, though. Fred warns, “If the primary account holder isn’t paying their bills on time, the authorized user's credit score could decrease."

What to consider before becoming an authorized user

If you need access to credit or want to build your credit history, it’s good to think through the factors involved in becoming an authorized user before making this choice.

• Do you trust the primary account holder? Because their spending habits can now impact your credit, you want to make sure you trust that this account holder will use their credit card responsibly.
• Are you comfortable with limited account control? As an authorized user, you can't make account changes or dispute charges without the primary cardholder's permission.
• Have you thought about potential conflicts? Because two people are now spending from this same credit limit, you’ll need to have clear communication to avoid misunderstandings about card usage.

Preparing to become an authorized user

Before you sign on as an authorized user, it's important to have a clear understanding with the primary cardholder. 

Set clear expectations

Have a detailed discussion with the primary cardholder about:

• Your credit limit and how much you can use
• Acceptable spending categories
• Procedures for exceptional circumstances

Discuss financial responsibilities

Clarify financial aspects such as:

• Who will be responsible for any fees
• How quickly you'll pay off any debt 
• The importance of paying more than just minimum payments

Remember, both you and the primary account holder should be equally committed to making this arrangement successful.

Understand the primary cardholder's perspective

James advises, “The primary account holder should establish the ground rules since they are legally responsible for the credit card’s payments and balance. Always have the authorized user verify with you prior to making a purchase to prevent exceeding the balance or credit limit.” 

Plan for potential changes

As an authorized user, it's wise to:

• Identify circumstances that would lead you to remove yourself from the account
• Set a schedule for regularly checking your credit report
• Have a backup plan for accessing credit if you need to stop using the card

By considering these factors in advance, you'll be better prepared for various scenarios that might come up during your time as an authorized user.

How to become an authorized user

Here's what you need to do:

1. Have your personal information ready.
2. The primary account holder will need to contact their credit card company to add you.
3. The new card usually goes to the primary cardholder's address, though some allow it to be sent to a secondary address.
4. Check if there's a fee for adding an authorized user — it's often free, but not always.

Alternatives to being an authorized user

Not sure if being an authorized user is right for you? There are several other options that could help you build or improve your credit:

Secured credit cards

Think of secured credit cards as training wheels for your credit journey. You'll put down a deposit that becomes your credit limit — usually starting small. These cards are easier to qualify for with a limited credit history. Your deposit acts as collateral, reducing the risk for the credit card company. 

If you have some savings and feel ready to manage credit independently, a secured card can be a good option for establishing a pattern of on-time payments without needing a primary cardholder's oversight.

Credit-builder loans

Some banks offer credit-builder loans, which are designed to help you build credit and savings simultaneously. With this product, you "borrow" a sum that the bank holds in a savings account. 

You make regular payments over time, and once you've paid the full amount, you receive access to the funds. This allows you to demonstrate your ability to make consistent, on-time payments while also building up savings.

Joint account holder

Becoming a joint account holder on a credit card gives you more control and responsibility than being an authorized user.

Both account holders have equal rights to use the card and make account decisions. If both parties use the card responsibly and make on-time payments, it can benefit both credit histories equally.

However, be aware that many major credit card issuers don't offer joint credit card accounts; it’s more common for savings and checking accounts. 

Frequently asked questions

The bottom line

Being an authorized user can be a great way to build credit, especially if you're just starting out or trying to improve your credit score. But remember, it's a two-way street. You'll need to trust the primary cardholder, and they'll need to trust you.

Before you sign up, have an honest conversation about expectations, spending limits, and how you'll handle any issues that come up. With clear communication and responsible use, being an authorized user can be a smart step toward building your credit over time.

Editorial disclosure: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.