Adding an authorized user: how it works and what it does to both credit reports

Who owes what: owner, authorized user and joint holder

Adding an authorized user gives someone a card on your account. It does not make them a borrower. The CFPB answers the question directly for a common situation, a relative's card after death: being an authorized user generally does not obligate you to pay the debt. [1] myFICO says the same about the score side: as an authorized user you are not legally responsible for the debt on the account. [4]

That makes the account owner the one carrying the risk. Every charge the authorized user makes lands on the owner's bill. A joint account is a different arrangement entirely: the CFPB says each joint account holder is responsible for the full balance, and the issuer can collect from either one. [3] If what you actually want is shared responsibility, an authorized user setup will not give it to you.

How the account can appear on the authorized user's report

The CFPB says credit card issuers usually report authorized users' status to the credit bureaus. [1] Once it is reported, the account's history becomes part of the authorized user's file. myFICO says authorized user accounts can appear on your credit report and affect your FICO Score, and that both positive and negative information can count: good account management can help, while missed payments or high utilization by the primary cardholder can hurt. [4]

How much it counts depends on the score version. myFICO says older FICO versions treat authorized user accounts the same as the primary account holder's, while in recent versions authorized user accounts have less impact than primary accounts. [4] So the benefit to a thin-file teen or partner is real but not guaranteed to be large, and it varies by which score a lender pulls.

One reporting error to watch for: the CFPB lists being reported as the owner of an account when you are actually just an authorized user as a common credit report error, and recommends disputing such errors with both the credit reporting company and the company that furnished the information. [5]

Worked example: the same card, two reports

Say an owner has a card with a $10,000 limit, adds a partner as an authorized user, and the issuer reports the account to the bureaus for both of them. In month one the owner's own spending puts $1,500 on the card; the partner adds $2,500. The statement shows $4,000, which is 40 percent of the limit. Both reports can show that same 40 percent figure for this account, because it is one account, not two. The owner owes all $4,000; the partner generally owes nothing to the issuer. [1][4]

Now suppose the owner pays $4,000 on time every month for a year. Both people can benefit from that on-time history, with the partner's benefit smaller under recent FICO versions. [4] If instead the owner misses a payment, the partner's score can be hurt too, even though the partner never had a bill to pay. [4] The fix in that case, per myFICO, is for the authorized user to ask to be removed, after which the account will be removed from their credit report. [4]

The utilization math works the same way it does in our credit utilization guide: balance divided by limit, per card and overall. An authorized user who also has their own small card should calculate both, because the shared card's balance can raise their overall ratio.

Removing an authorized user

The CFPB's steps are short: call customer service and ask that the authorized user be removed from your account, then tell the person their access has ended. Ask the issuer whether you should get a new card with a new number; the CFPB says this may be a good idea if the authorized user has your card number. [2]

Removal does not undo charges already made. Those were made on your account with your permission, so they stay on your bill. If the relationship has broken down and you expect disputed spending, remove access and replace the card number on the same call rather than waiting for the next statement. If you are the authorized user and the owner is paying late, myFICO says you can request removal and the account will be removed from your credit report. [4]

Adding a teen: what happens to a minor's file

The CFPB says children under 18 generally do not have credit reports, with exceptions that include a minor child being an authorized user of an adult's credit card. [6] Adding a teenager can therefore start their credit file. That is the point for many parents, but it also means the parent's payment record on that card becomes part of the teen's history from the start.

Ask the issuer whether it allows a minor as an authorized user, and from what age, before you plan around it. Whether the teen ever holds the physical card is up to you; their file can show the account either way once it is reported.

Checklist before adding a teen or partner

If you are the one being added, the risk runs the other way: you do not owe the debt, but you share the account's reporting. Ask the owner how they pay the card before you agree.

• Confirm the issuer reports authorized users to the credit bureaus; reporting is usual but not something to assume. [1]
• Check your own track record on this card: a missed payment or a high balance can count against the authorized user too. [4]
• Decide whether you need shared responsibility. If yes, an authorized user arrangement does not provide it; a joint account does, with both people liable for the full balance. [3]
• Agree on a spending limit and how it is enforced. The authorized user can create charges you alone owe. [1]
• Know the exit: removal is a call to the issuer, plus a possible new card number. [2]
• For a minor, pull the child's report later to confirm the account is listed correctly. [6]
• For both people, check reports for the account being listed as owned rather than authorized user; dispute it if so. [5]