What You Must Know About Authorized Users

What You Must Know About Authorized Users

Before you add someone to your credit card as an authorized user, be sure to think it through carefully. It’s important you understand the legalities when you give someone permission to be on your credit account.

Let’s Cover the Basics

If you’re not sure exactly what the term “authorized user” means, it’s when an additional party has permission from the primary account holder to use a credit card account. That is slightly different from the codebtor, in that a codebtor is also legally responsible for the balance on the account, whereas an authorized user is not responsible for the balance on the account. Whether you want to become someone’s authorized user or whether you want to allow someone to be an authorized user on your account, there are two big points that you should consider.

What You Need to Keep in Mind

One thing you need to remember is that the account may not be reported on the authorized user’s credit report. This lack of reporting might defeat the whole purpose of establishing an authorized user relationship, which is usually to help bolster the authorized user’s credit score. You want to confirm with the credit card issuer that authorized users will be reported on their credit report in order to get the benefits of the additional credit reporting. If the credit card issuer cannot or will not tell you how the account will be reported on the authorized user’s credit report, you may want to consider some other option to achieve the same credit score increasing goal.

Another thing you need to consider is that if you’re going to ask someone to be an authorized user on their account, you should have a clear picture of what their credit history looks like. The ideal person to connect with is someone who has an excellent credit score. This type of person will give you the most improvement in your own score when the account remains in good standing. On the flip side,you will both be negatively impacted if they miss a payment or make a late payment

Make a cautious decision before moving forward with an authorized user arrangement. If you have any questions on this topic, please email me at [email protected]

Donald Hedervare
About the Author: Donald Hedervare
Donald J. Hedervare, Jr. has been practicing in the areas of bankruptcy law, student loan law and military justice for 17 years. He is a member of the Minnesota State Bar Association, the Ramsey County Bar Association, and the National Association of Consumer Bankruptcy Attorneys.