How Does Being an Authorized User Affect My Credit?

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When you are an authorized user on another person’s credit card, it can seem very similar to having your own account; you have a card with your name on it, and you use it just as you would any other credit card. But is it the same when it comes to your credit? Unfortunately, there is not one easy answer to this question. However, by learning about the possible impacts of being an authorized user, you can be better prepared to protect your credit.

What Does It Mean to Be an Authorized User?

Being an authorized user means that somebody who already has a credit card adds your name to their account. You are then issued a card with your name on it, and you can use that card for purchases. Authorized users are usually added by family members, for example, a person might add his or her spouse, or a parent may add a child.

The difference between being an authorized user and having an account of your own, is that as an authorized user, you are not legally responsible for any charges on the card. All debt is the responsibility of the primary account holder. Being an authorized user also differs from being a joint account holder in terms of liability. Like primary account holders, joint holders are also legally responsible for paying back any charges made with the card.

Reporting to the Credit Bureaus

While you are not legally responsible for paying any debt you incur as an authorized user, it is likely that your credit will be affected. This is because many credit card companies report the accounts of authorized users to the credit bureaus. These accounts then affect the credit reports and credit scores of the authorized user.

However, it can be difficult to predict exactly how your credit will be affected because different credit card companies handle authorized users in different ways. Some report authorized users to the credit bureaus in exactly the same way as primary cardholders. If this happens to you, then the entire history of the account you are authorized to use will end up on your credit report, where it will look like your own. Other companies report authorized users in a different way, so that anyone who views their credit report can see the difference between that and their other accounts. Finally, some credit card companies don’t even report authorized users to the credit bureaus at all. If the credit card company does not report you to the credit bureaus as an authorized user, then your credit report will not be affected.

Positive and Negative Effects to Your Credit

In some cases, a person becomes an authorized user mainly for the reason of trying to improve his or her credit. This can work if the primary cardholder has good credit and pays their bills on time. However, being an authorized user is not always beneficial. If you are thinking about becoming an authorized user, don’t forget to consider the possible risks to your credit. It could be harmed if the primary cardholder does not use his or her credit wisely, for instance maintaining a high balance or not paying bills on time, because this behavior may show up on your own credit report.

The impact on your credit can also vary depending on how lenders and other people viewing your report actually interpret the information they find there. Some credit scoring models give different weight to accounts where you are an authorized user, so it might not benefit you as much as you hope. A lender who looks at your report may also be unimpressed by an account where they see that you are only an authorized user, because they may prefer to see proof that you can responsibly manage your own account.

As an authorized user, you can have your name removed from the account at any time, however, be aware that being removed can also impact your credit. If the primary cardholder was running up high balances or not paying the card on time, then removing it from your credit is likely to be beneficial. However, if the account was having a positive impact on your credit—for instance by increasing the overall length of your credit history—then removing it can have a negative effect.

While it can be difficult to determine exactly how your credit is affected as an authorized user, you need to be aware that the impact could be significant. You should consider the potential impacts, and only be added to the account of a person whom you trust. If you do end up experiencing credit problems related to the account, you can work with a credit repair company to help you dispute the negative items.

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