An authorized user refers to an individual who has obtained permission from the primary account holder to utilize their credit card or other financial account. When you are an authorized user, you have the freedom to make purchases and utilize the credit line linked to that account. However, it’s important to note that you are not legally obligated to repay any debts accrued on that account. The primary responsibility for charges made by an authorized user lies with the primary account holder.
Authorized users can be added to various types of accounts, including credit cards and bank accounts. This arrangement is often used by parents who want their children to have access to credit or by individuals aiming to assist someone in establishing or enhancing their credit history.
The impact of being an authorized user on someone else’s account can vary when it comes to credit scores. Generally, being an authorized user on an account with a positive payment history and low utilization of credit can positively influence your own credit score. The history of the shared account may be incorporated into your own credit report, potentially bolstering your overall creditworthiness.
However, if the shared account has a negative payment history or high utilization of credit, it could adversely affect your own credit score.
The specifics of how authorized user accounts are treated by credit reporting agencies can vary and practices may differ between different credit bureaus.
It’s important to exercise caution when considering becoming an authorized user on someone else’s account. While it can be a helpful strategy for building credit, there are also risks involved. If the primary account holder mismanages the account, it could negatively impact your credit score. It’s crucial to maintain open communication with the primary account holder and ensure that you trust their responsible handling of their credit.
Since credit scoring models and reporting practices may change over time, it’s advisable to seek guidance from a financial advisor or credit expert to understand the current implications of becoming an authorized user on someone else’s account in terms of your credit scores.