Adding someone to your credit card as an authorized user is a great way to help them build credit. As long as you and the added user manage the account responsibly, it can provide a quick, easy, and significant boost to their credit score.
However, there are risks involved for both parties. Here’s what you should know about the process before getting started. This includes how being an authorized user works, how much it can help, and when it’s a good idea.
How Much Will My Credit Score Go Up if I Become an Authorized User?
Unfortunately, it’s impossible to predict how much your credit score will go up if you become an authorized user. It varies significantly depending on what else is on your credit report and how well you and the primary account holder manage the account.
However, you can see significant improvement to your credit score as long as you or the cardholder make all your payments timely and keep the credit card debt balance at a healthy level.
That’s especially true if you have no credit, bad credit, or a thin credit profile.
For example, Credit Sesame conducted a study of 2,000 individuals and gathered data on the average improvement to their credit score after becoming an authorized user and found that:
- Individuals with a credit rating below 550 increased their scores by 10% within 30 days, 18% within three months, 27.5% within nine months, and 30% after a year.
- Individuals with a good credit score above 700 only increased their rating by 3.5% in 30 days, 5.2% in three months, 8.5% in nine months, and 9% after a year.
As you can see, the credit score increases were much more dramatic for the individuals that had lower scores. Those with scores above 800 saw only 1% improvement in their scores.
All that said, keep in mind that these are just the average results of a randomly sampled group of people. There’s no way to know why those with bad scores had such poor credit or how they managed their accounts, so your mileage may vary.
How Authorized User Accounts Build Credit
Adding someone as an authorized user to a credit card in good standing can benefit their score in many ways, as long as the card issuer reports the account’s activity to the credit bureaus.
For example, the three most significant ways that authorized user accounts typically build credit are the following:
- Payment history: As you make your monthly payments on time and in full, you’ll build a positive payment history for your authorized users. That’s worth 35% of their FICO score and goes a long way toward improving their creditworthiness.
- Amounts owed: At each statement date, the credit card issuer reports the balance on the card and its credit limit to each major credit bureau. The former divided by the latter is your credit utilization ratio, and keeping it between 1% and 10% should improve their credit score.
- Length of credit history: The third most impactful factor in your FICO score is the age of your credit accounts and the length of your credit history. Older and longer is always better. Fortunately, the age of an authorized user account on their credit report is the same as its age on yours.
Becoming an authorized user can also expand or diversify their credit mix, though it’s less impactful to their credit scores. It’s always best to have multiple revolving and installment accounts.
Finally, adding an authorized user doesn’t require that the primary cardholder or the authorized user undergo a credit check. That means it won’t add a hard inquiry to anyone’s credit report or damage credit scores.
In fact, all you usually need to add an authorized user is some basic identifying information, such as their name, date of birth, address, and Social Security number (SSN).
Disadvantages of Being an Authorized User
Becoming an authorized user can be a great shortcut to better credit. It usually takes months of discipline to increase your credit scores meaningfully, so anything that can speed up the process is worth considering.
However, there are some potential downsides, and it won’t necessarily make sense in every scenario. For example, one of the most significant disadvantages is that the primary account holder can damage your score if they fail to use the account properly.
They might miss monthly payments or keep a significant credit balance on the account, and that can be even more harmful to your credit score than usual if you have a thin credit profile.
Becoming an authorized user is also unlikely to help your credit score as much as opening your own credit account or a joint credit card and building credit history with it could.
Unlike a joint account holder, authorized users aren’t legally responsible for making payments on the accounts they share.
As a result, lenders give less credence to good behavior on the card, knowing that it’s not necessarily the work of the authorized user.
Which Credit Card Companies Report Authorized Users?
Becoming an authorized user can be a great way to build credit, but only if the card issuer reports your connection to the account. If they don’t, it won’t show up on your credit report and you’ll see no change to your credit score.
Every credit card company sets its own policy regarding credit reporting for authorized users. Some only report for users that meet an age requirement or for accounts current on their payments.
Fortunately, most major credit card issuers share authorized user activity with Experian, Equifax, and TransUnion. Here are the policies for ten of the most popular banks in the United States.
Authorized User Account Policies By Financial Institution
| Financial Institution | Authorized User Account Policy |
| American Express | Reports for all authorized users over 18 years old, as long as the account is current. |
| Bank of America | Always reports. |
| Barclays | Reports for all authorized users over 16 years old. |
| Capital One | Always reports. |
| Citi | Always reports. |
| Chase | Always reports. |
| Discover | Reports for all authorized users over 15 years old. |
| Synchrony Bank | Always reports. |
| U.S. Bank | Reports as long as the account is current. |
| Wells Fargo | Reports for all authorized users over 18 years old. |
Source: NerdWallet
While these policies can change, you can be reasonably confident that any major credit card company will report authorized user activities to the credit bureaus as long as the account is current and the authorized user is an adult.
If your credit card is from a smaller credit card company, they may be less likely to report authorized user activity since sending information to the credit bureaus costs money.
When in doubt, you can always reach out to confirm. Consider doing so if you don’t see the account show up within a few weeks of the first statement date after adding the authorized user.
Who Should You Allow Authorized User Access?
In general, you should only allow authorized user access to someone when you’re close with them personally and want to help improve their credit score.
If you intend to give them a physical credit card that they can use to make purchases with your credit line, you should also make sure you trust them implicitly.
For example, many people make their child an authorized user on their best credit card to help them build credit early. However, they might refrain from giving them a physical copy of the card if they tend to blow their lunch money on video games.
While children are likely the most popular choice for authorized users, you might also consider giving access to a sibling, close family friend, or spouse to help them with credit repair.
It’s usually a bad idea to allow authorized user access to someone who isn’t in your inner circle. Not only does that create a risk that they’ll act against your best interest, but it can also potentially expose you to identity theft issues or fraud allegations.
Are There Alternatives to Being an Authorized User?
People typically add someone as an authorized user to help them start establishing their credit. As a result, anything that can build credit for someone with no credit history or a thin credit profile is a viable alternative.
Fortunately, there are plenty of tools and strategies for that. Here are some of the best options:
- Secured credit card: A secured credit card requires a cash deposit as collateral. The deposit usually equals the total available credit limit on the account, so the issuer can use it to recover all of their losses in case of default. As a result, they’re much safer for the creditor, and borrowers with bad credit can qualify more easily.
- Credit builder loan: Instead of requiring a cash deposit, a credit builder loan uses the loan proceeds as collateral. Because of this, there’s usually no credit check to apply, and people with bad credit can still qualify. Once you pay off the loan, you receive the principal and a better credit score as your reward.
Whatever option you choose, you can see an even more significant increase in your score than you would by becoming an authorized user.
For example, consider Credit Strong’s credit builder loan. We studied over 50,000 of our customers’ accounts and tracked their credit-building progress.
On average, we found that they see a 25-point increase in their credit scores after three months. Within nine months, that went up to almost 40 points!
It didn’t stop there, though. After a year of timely payments, Credit Strong account holders see an average increase to their score of nearly 70 points!
Credit Strong really works, and it can work for your loved ones too. Give it a try today!
FAQs
How Many Points Does Being an Authorized User Raise Your Credit Score?
Generally, those with bad credit, no credit, or a thin credit file will see the most benefit as long as the account is current, there are no late payments, and it has a low credit utilization.
How Long Does It Take for an Authorized User To Show on Your Credit Report?
An authorized user should see the account you add them to show up on their credit report within a couple of months, at most.
When you add an authorized user, the credit card issuer should report the change to the credit bureaus on the next statement date. That’s the last day of the monthly billing period. After that, it can take another two to three weeks to show up on their account.
Does Removing an Authorized User Hurt Their Credit Score?
Unfortunately, removing an authorized user can hurt their credit score. It often takes away an account responsible for much of their positive payment history, increases their total credit utilization, and eliminates their oldest credit card account.
Will Adding My Child as an Authorized User Help His Credit?
Adding your child as an authorized user should help his credit as long as you make all your credit card payments on time and keep your credit utilization below 10%.
You should also confirm that your credit card issuer reports authorized user activity for children to the credit bureaus. If they don’t, your child won’t see any benefit to their credit score.
Does Having an Authorized User Hurt Your Credit?
Adding an authorized user to your account never hurts your credit since there’s no credit check involved. However, if the user abuses their privileges and misuses the card, they can damage your credit score.
As a result, you should never allow someone access to your line of credit that you don’t know and trust.
