How Does Putting Somebody on My Credit Card Affect My Credit?

You might help a friend or loved one build his credit history or access a line of credit he otherwise could not get by adding him to your account, but this person could wreck your score while, in some cases, doing no damage to his own credit. Whenever you add someone to a credit card account, you should trust the person and set ground rules on account use. You can even help him get a separate account.

Joint Account

Adding somebody as a joint account holder makes the person a co-owner of the account, so he can use the credit limit as he sees fit and change account details. The credit bureaus report activity on a joint account on both reports. If one joint account holder maxes out a credit card and neither party can pay, both credit histories will suffer.

Authorized User

Adding someone as an authorized user can be safer than adding a joint account holder, but just as dangerous for your credit history. The authorized user cannot change accounting settings and will not receive the bill. However, the authorized user can make charges on the card. Thus, the onus of paying the bill, even for charges you do not approve, falls on the primary account holder. As long as you pay the minimum every month, you and all of your authorized users receive positive payment history. Miss a payment and only you are affected.

Misconception

There is no such thing as a joint credit report. The only time another person's bad credit can affect your credit history is when you become a joint account holder on another account with bad history. Adding someone close, such as a spouse, to an account you own with good credit history boosts their score and transfers all previous history.

Alternative

In most cases, putting somebody on your credit card account is a poor move. There are credit card accounts that nearly anyone can get, such as a retail or gas card, or a secured credit card, which requires a deposit from the primary account holder. You could give someone close a prepaid debit card and load it with funds. While prepaid cards do not build a credit history, you cannot go over the limit with one, and the owner can report payments to an alternative credit agency.