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Credit Card Authorized Users—How to Avoid Getting Burned

Know the potential risks for adding an authorized user to your credit card, or being added as one on someone else's card.

By
Laura Adams, MBA
7-minute read
Episode #419

How a Card Owner Affects an Authorized User’s Credit

Now let’s discuss the flip side, which is how the behavior of a card owner affects you when you’re an authorized user.

As I mentioned, the card’s account activity shows up on your credit report—as long as the card company reports it to the credit bureaus. That could be a dream come true or a nightmare, depending on how responsible the card owner is.

I say “typically” because your credit report shows that you’re an authorized user and not an account owner. In some cases, creditors may give the account less weight, or none at all, because they know that you may not responsible for the debt on that account. Nonetheless, it can still be a great first step in establishing a credit history and building credit so you can eventually qualify for your own accounts.

Likewise, irresponsible behavior that hurts a card owner’s credit generally also hurts an authorized user’s credit. However, one of the major credit bureaus, Experian, says they don’t allow negative information to be reported on an authorized user’s account.

So, whether being an authorized user can help you build credit depends on:

  • Whether the credit card company reports account information to the credit bureaus in the name of authorized users;
  • Whether a creditor or the credit scoring model used factors in account information for authorized users; and
  • Whether the card owner shows responsible use of the account.

How to Remove Your Name as an Authorized User

What’s really important to understand is that if a card owner starts paying late or maxing out the account, you can take steps to protect your credit, even as an authorized user. Never allow a cardholder’s negative history to also drag down your credit.

One way to protect yourself is to contact the cardholder or the credit card company and ask to be removed as a user on the account. Unless you’re married and live in a community property state, creditors will typically remove you if you request it.

Another way is to remove the user account from your credit report by disputing it with each of the credit bureaus that reports it. Again, state law and your relationship with the card owner will come into play. But an authorized user account with negative information it could disappear from your credit files in 30 to 60 days.

See also: 6 Ways to Pay Off Credit Card Debt

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.