You already know what happens to your credit score when you open a new credit card, but what happens to your score when you add an authorized user to your account?

In short, less happens than you might think. Here’s how the process works in a nutshell:

  1. Add authorized user
  2. Credit card for AU is mailed to your address
  3. Give the AU the card
  4. AU starts spending
  5. You are responsible for the bill

Simple, right? What’s the catch?

How adding an authorized user affects you

Contrary to popular opinion, when you add an authorized user to your credit card, your credit score is actually unimpacted. In fact, adding an authorized user can be beneficial for both you and the AU (I’ll explain in a minute). On top of this, the AU’s credit history will not impact yours as the primary cardholder.

While your credit score is not directly impacted by adding an AU, it could certainly be indirectly impacted if you don’t pay your bill as a result of the authorized user’s spending, since all payments are solely your responsibility as the primary cardholder.

How adding an authorized user affects the AU

Authorized users have a lot to gain by being added to someone’s account.

Why?

Because as soon as they are added to an account, they inherit that account’s credit history. But, understandably, this can be both good and bad depending on how responsible the primary cardholder is.

For example — If I have a CapitalOne Venture card open with a credit limit of $20,000 and an account age of 5 years, I can add an authorized user to that card and they immediately inherit the $20,000 limit and 5 year age of credit on their credit history.

On the other hand, if I am a primary cardholder and I forget to pay my bills, the credit report ding will also be reflected on the authorized user, if you’re an AU please keep this in mind.

Old, high-limit accounts are best

If you’re an authorized user and are looking to get attached to a credit account (there are companies you can actually pay to do this for you), you’re going to want to choose an account that has a high age and credit limit. This will be the account that looks best on your credit report.


Featured image via Ryan Born

 

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DaninMCI
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DaninMCI

I’ve done this for my kids over the years. I never physically give them the AU card. Something I just thought of is would being added as an AU impact something like the Chase 5/24 rules. I assume it would. Also say I add an AU to a BofA card. I assume this might limit the AU to a certain number of cards or even credit limit total over all cards. On the other hand I assume most AU’s don’t have the credit score or credit length to start churning cards right away.

Michael
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Michael

@DaninMCI, you’re a nice dad for thinking of that. When I did some work for my dad’s small business growing up, he made me an AU on a couple of his gas-station cards (which I actually used), so by now, these are 40+ year credit lines on my report. An accidental gift. Folks should understand, however, that being a new AU DOES IN FACT impact Chase 5/24 and other such “count” rules UNLESS you ask each of the 3 credit bureaus to remove such credit cards from your reports (which they’ll do – when you’re an AU, the card will… Read more »