Being an authorized user on a credit card can be a valuable tool for many reasons, find out what they are and how they affect you!
Do you know what it means to be an authorized user on a credit card? Did you know it can be a useful tool to improve your credit score? Let’s talk about these things, and the potential risks and responsibilities involved.
Before getting started, remember that open communication and trust between the primary cardholder and authorized user is essential to make this experience work. Also, if you want to check out more financial tips on our website, you can click on this link!
What Is an Authorized User?
It is someone who gets added to a credit card account by the primary cardholder. They receive their own card with their name on it, allowing them to make purchases. However, the difference lies on the responsible for paying the bill, authorized users are not legally responsible for paying it, only the primary cardholder is.
What Can You Do as an Authorized User on a Credit Card?
Authorized users can make purchases, get a cash advance and make a balance transfer with their card, just like the primary cardholder. They may also be able to view account statements and set up spending limits, which can help track and limit spendings. On top of that, they might also be eligible for benefits like travel insurance, airport lounge access and purchase protection.
What Can’t You Do?
They usually are not allowed to make changes to the account, such as increasing the credit limit or changing the mailing address, contact information or account PIN. In addition to that, they can’t close the account, become the primary cardholder, or add more authorized users.
How to Add or Become an Authorized User on a Credit Card
To become an authorized user, ask a trusted family member or friend to add you to their credit card account. The primary account holder will need your full name, date of birth, Social Security number, and address. Then, the process is pretty straightforward:
- The primary cardholder contacts the credit card issuer;
- The issuer performs a credit check on the authorized user;
- Once approved, the issuer sends a card to the authorized user.
How to Remove or Get Removed as an Authorized User on a Credit Card
The primary account holder can remove an authorized user at any time, usually online or by calling the credit card issuer if online options are unavailable. Authorized users can also request removal directly from the credit card issuer.
Remember, your credit score might be affected after removal. If the card had a long history and you lack other accounts with similar age or you have limited credit, you could see a drop in your score.
How Does Being an Authorized User Affect Your Credit Score?
If the primary cardholder makes their payments on time and keeps the credit utilization ratio low (the amount of credit used compared to the credit limit), being an authorized user can significantly improve your credit score. However, if the primary cardholder is irresponsible with the card, your credit score will be negatively impacted.