How Does Being an Authorized User on a Credit Card Affect Your Credit Score?

When you open a new credit card, you have the ability to add authorized users to the account. This gives the authorized users the ability to spend with the card, but it can also affect those users' credit histories and credit scores. If you are an authorized user on a credit card account, you need to be aware of the potential impacts to your credit score.

Credit Reporting

When you are listed as an authorized user on a credit card account, the credit card will generally show up on your credit report. To your lenders, it will look like it is simply one of your credit cards. There is no distinction on your credit report as to which credit cards are opened in your name and which ones only list you as an authorized user. This makes becoming an authorized user a very important credit factor to consider.

Poor Reflection

When you are going to be added to a credit card account, it is very important that you consider with whom you are associating. If you are added onto the credit card of a person who has a low credit score, this may negatively affect your credit score as well. If the person racks up large balances on the credit card and then does not make payments on time, this can significantly hurt your score.

Paying for This Service

Because of the importance of that credit bureaus place on authorized users, some people have begun to manipulate this phenomenon. If you have poor credit, you could potentially rent the credit history of someone who has solid credit. For a one-time fee, you could be added on as an authorized user of someone else's credit card account. You could also be added on to the account of a family member who has a good credit history to ultimately help your own credit.

Considerations

If you are trying to apply for a loan, you need to think about the impact of being an authorized user on someone's account. Even if you have a great credit history otherwise, you may want to remove yourself from any credit card accounts that are associated with people who have bad credit histories. The credit card balance will also be used when calculating your credit utilization ratio, and it will look as if you have used more credit than you actually have.