Will an Authorized User Help Your Credit Score?

Credit card companies that allow authorized user accounts permit current cardholders to add another individual to the account. The authorized user receives a credit card of his own and any purchases he makes are then charged to the primary cardholder's account. Adding an authorized user to your credit card can impact both the user's credit score and, in some cases, your own.

How It Works

Current cardholders do not add authorized users to their credit card accounts to improve their own credit scores. Adding a new user to your credit card does not benefit your credit score in any way. If the credit card company reports your credit card payment history on the authorized user's credit report -- and not all do -- your positive payment history on the card will contribute to the authorized user's overall credit score. In order for your authorized user's credit score to benefit, however, she must be a family member. The FICO credit scoring formula ignores authorized user accounts belonging to non-family members.

Potential Risks

As the primary cardholder, you assume a considerable risk by adding an authorized user to your account. The authorized user receives a card of his own directly tied to your account and you -- not him -- are legally responsible for paying any charges he incurs.

If you cannot afford to pay off your authorized user's purchases, your credit card company will report the missed payments to the credit bureaus. Your credit report and that of your authorized user will then reflect the derogatory information and your credit scores will suffer.

Additional Damage

Even if you can afford to pay the minimum payment on your credit card account, the purchases your authorized user makes can still lower your credit score by increasing your credit utilization. The debt you owe to your credit card company compared to your available spending limit makes up your credit utilization ratio. The lower the margin between the two, the worse your credit suffers. Thus, by making high purchases on your credit card account, the authorized user can inadvertently hurt both of your credit scores.

Considerations

While you face credit risks by adding an authorized user to your credit card account, the authorized user also faces potential credit damage. If you miss a payment, default on the card or include the card in a bankruptcy petition, evidence of your inability to pay will appear on the authorized user's credit report and factor into her credit score.

Removing Authorized Users

If you know you cannot keep up with your credit card payments and want to prevent the user from suffering credit damage or your authorized user is spending more on your credit account than you can comfortably pay, you can protect both your credit rating and his by removing the user from your account. Because the account belongs to you, you can remove an authorized user at any time by contacting your credit card company.