Navigating the nuanced world of credit scores can feel like charting a path through a dense jungle. One suggestion that commonly pops up for people looking to build their credit is to become an “authorized user.”

But what exactly is this status, and more importantly, what kind of impact does it have on your credit report? Let’s dive a little deeper to find out more.

What is an authorized user on a credit card?

An authorized user is someone who receives the green light to use another person's credit card account, though they aren't legally bound to settle the balance. Basically, you’ll have your own credit card in your wallet, enjoying its perks without the direct responsibility of making payments.

Family members, driven by their goodwill, often onboard younger kin as authorized users, paving the way for them to initiate their credit journey. Here, the account owner, usually a parent, guardian, or partner, shoulders the accountability for the actions on the account.

But why is this important? Well, in a world where credit checks are standard procedure for everything from renting apartments to securing jobs, beginning with a sturdy foundation is crucial. This is where authorized user accounts come into play.

Can being an authorized user help build or repair credit?

Becoming an authorized user on someone’s credit card, especially if he or she has impeccable credit habits, can positively influence both your VantageScore and FICO score. Let's break down how it works.

Payment history

Your credit file paints a detailed picture of the payment habits of the primary cardholder. It's as if their on-time payments cast a halo effect on your creditworthiness. In the realm of credit score calculations, maintaining a consistent payment history is a significant contributor.

Credit utilization ratio

The primary cardholder's knack for managing her credit limit plays a pivotal role. If she uses only a fraction of her available credit, it sends a positive signal.

This management of spending is known as the credit utilization ratio. It's a critical factor for credit scoring models used by major credit bureaus like Experian, Equifax, and TransUnion.

Account age

Age isn't just a number when it comes to credit. If the primary cardholder's account has been operational and in good standing for a number of years, it can increase the history of your credit report. This factor can be particularly advantageous for younger individuals who haven’t had the opportunity to build a positive credit history of their own.

However, not everything is rosy. If the primary cardholder makes late payments or frequently runs up a high balance on her credit card, then the repercussions are also felt on the authorized user's credit report. Vice versa if the authorized user does the same.

That's why it's not merely about getting added as an authorized user but choosing a responsible account owner who boasts a pristine credit history and lower interest rates. It’s also important for the authorized user to practice good financial management, as the risks to the primary account holder are quite high.

How do you become an authorized user?

Becoming an authorized user is generally a straightforward process. The journey typically begins with the primary account holder reaching out to their credit card issuer. With companies like American Express, Chase, and other credit card companies offering this facility, the process is fairly standardized.

The primary account holder forwards the important details of the prospective authorized user, namely the social security number and date of birth. The credit card issuer then evaluates the request.

Once they give approval, the new card, imprinted with the authorized user’s name, is mailed out. It might land at the primary account holder's address or directly at the authorized user's doorstep, depending on the company's policies.

It’s important to remember that while this process sounds smooth, policies, including annual fees and age requirements for authorized users, might vary. This is why a thorough understanding of the terms and conditions for the primary cardholder’s specific line of credit is important in order to avoid any issues in the process.

How can an authorized user be removed?

Relationships change, and financial goals evolve. In such fluid scenarios, there might be a situation where either the authorized user or the primary cardholder wishes to sever the authorized user status.

Thankfully, the process to end authorized user activity is just as simple as the initiation. The primary cardholder simply needs to call his credit card issuer and mention his intent to remove the authorized user. Once confirmed, this status is revoked, ensuring that no further credit account activity impacts the current cardholder or former authorized user.

However, what if the authorized user chooses to remove himself from the account? In a proactive move, he can reach out to the credit card companies and put forth his desire to separate from the account. This action safeguards his credit history from any future ripples due to the primary cardholder's credit activities, such as missed payments or credit card debt.

What are other ways to build credit?

Sure, being an authorized user is like riding the express train in the credit world. But there's a vast landscape of opportunities beyond this.

Other ways you can increase your credit:

  • Secured credit cards: Consider these the training wheels in the credit universe. You furnish a deposit, which then becomes your available credit. This card type can help you build a positive credit history or mend a tarnished credit history.
  • Credit-builder loans: These are not your run-of-the-mill loans. Lenders report the repayment trajectory to credit bureaus to help improve your score quickly.
  • Joint credit card: Similar to having a cosigner for a loan, this option requires pairing up with someone with a stellar credit history. The difference is that applying for a joint credit card means both of you share the responsibilities of maintaining the card balance.
  • Apply for a Vital Card: Vital Card offers a unique approach to credit-building. Our card also incentivizes responsible spending and timely repayments with cash rewards.

As you explore these avenues, remember to periodically check your free credit score. Knowing where you stand is half the battle.

Final Thoughts

Being an authorized user can be a stepping stone in your credit-building journey. However, it's important to remain informed and only get involved with accounts that maintain good credit habits. As the world of credit continually evolves, staying updated and making informed decisions is the key to personal finance success.

In the grand scheme of personal finance, understanding how being an authorized user affects your credit is fundamental. While it offers numerous benefits, it’s only one of many tools available for those looking to build or repair their credit history. With many resources and options, ensuring a secure credit future has never been more achievable.

In addition to asking loved ones to permit you access as an authorized user, you can consider joining the waitlist for Vital Card.


How Do Credit-Builder Loans Work? | Experian

What Is An Authorized User on a Credit Card? | Equifax

Why Do You Want a Good Credit Score? | Experian

How Do I Remove an Authorized User From My Credit Card Account? | Consumer Financial Protection Bureau

Credit Card Authorized User: What You Need to Know | Experian

How Do I Get a Free Copy of My Credit Reports? | Consumer Financial Protection Bureau

Vital Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.