The Advantages of Being an Authorized User on Credit Cards

Becoming an authorized user might help you get your own credit later.

Becoming an authorized user might help you get your own credit later.

An authorized user is someone who has the right to use someone else's credit card. If you have a poor credit score and are able to sign on to an established account as an authorized user, you could benefit greatly.

Credit Score

When you become an authorized user of a credit card, the payment history of that credit card appears on your credit report. This can provide a substantial boost for your credit score if you have a bad credit history, although not all lenders consider authorized user status when computing a score. The three biggest components of your FICO credit score are your payment history, the amount of debt you have and the length of your credit history. An established credit account in good status will generally have a long history of on-time payments, along with little to no debt. When you become an authorized user, all of those positive marks become part of your credit history, potentially raising your score.

Payment Responsibility

As an authorized user, you have no responsibility for the debt on the credit card. If the original account owner stops making payments on the account, it will show up on your credit report, but you won't be liable for paying off the debt. The exact opposite is true for the original account holder. If you run up debt on the card, you can legally walk away from it, but the account owner must pay it off, even if he didn't personally charge a single thing on the card.

Access to Credit

Becoming an authorized user is a great way to get access to credit if you are unable to get your own credit card. Usually, when you become an authorized user, you will get your own physical credit card with your name embossed on it. As far as anyone else could tell, you would have your own credit card. However, you don't get your own actual account; you are only "authorized" to use the account of the original account owner. Even if you don't plan on making many charges on the card, having a credit card can be useful if you have to rent a car, check into a hotel or book an airline ticket, as some of these are not possible with a debit card. Regular use of the card might also help you get your own credit down the road, since your credit history will reflect the card usage, regardless of whether you or the account owner makes the actual charges.

Advantages for Spouses

While adding an authorized user is generally nothing but negative for an account owner, when the two parties are spouses, both can benefit. If your spouse has good credit and adds you as an authorized user, over time your credit history will improve. If you intend to make major purchases in the future together, such as a car or a house, you will generally get better rates if you both have a good credit history rather than if only one of you does.


About the Author

After receiving a Bachelor of Arts in English from UCLA, John Csiszar earned a Certified Financial Planner designation and served 18 years as an investment adviser. Csiszar has served as a technical writer for various financial firms and has extensive experience writing for online publications.

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