An authorized user is someone who is added to someone else’s credit card account. He or she has a card and is allowed to use it but is not financially liable for any of the charges. An authorized user is simply legally permitted (authorized) to use someone else's card.
You may have been an authorized user on your parents’ credit card accounts. Or you may have a child who is an authorized user on one of your credit card accounts. Here’s a little secret that you may or may not know: Authorized user accounts are a great way to establish credit or rebuild your credit -- for now.
Some of the credit card issuers actually report the account on the authorized user’s credit reports. That means that if the account is in good standing and the balance isn’t too high, it will probably help the authorized user’s credit scores. This is a very common way for children to establish credit. Parents add them to their credit card accounts and the account shows up on the child’s credit reports, creating a credit report with an established account and a healthy credit score (if the account is managed well).
This strategy is a very good one for authorized users because they get the positive benefit of the account without any of the liability for the payments. And if the parent or primary cardholder stops making payments or runs the balance too close to the credit limit, the authorized user can easily get the account removed by contacting the credit bureaus and asking them to remove it. Since they are not financially liable for the account, it is easy to have it removed. In fact, at least one of the three credit bureaus has a policy where they won’t even contact the credit card issuer as part of their verification process. They’ll simply remove the authorized user when the consumer asks that it be removed.
Since the additional card will be mailed to the primary cardholder, it’s possible that the authorized user will never even receive a card. That way the primary cardholder won’t have to worry about the authorized user making purchases with the card. It’s a win-win for both parties.
Search the Knowledgebase
Browse by Category
The article has been updated successfully.
