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TPG reader Janet tweeted at me to ask about adding an authorized user to her credit card account:
“When adding an authorized user, will their credit history affect mine?”
Most credit cards allow you to add authorized users to your account, which enables that person to make purchases on your credit line using their own personalized cards. Janet is concerned that adding a user might negatively impact her credit rating. However, the reality is that adding an authorized user is more likely to affect their credit score than your own.
When you add an authorized user, the account may show up in that person’s credit report, so your account history, balance and total credit line are factored into their score. That means adding a user can actually be a great way to help someone establish or improve credit, since they can take advantage of your high rating. Of course, your missed payments or other derogatory marks will also appear on their account, so I don’t recommend adding authorized users unless you’re on top of your finances.
On the flip side, authorized users won’t show up on your credit report, but activity on their card will. You’re ultimately responsible for any charges they make, including ones they don’t tell you about. If you end up carrying a balance or missing a payment because an authorized user made charges you didn’t approve or weren’t aware of, you’ll be the one who suffers for it.
All that aside, adding users to your account can be mutually beneficial in a number of ways. For one thing, charges made by authorized users will earn rewards, so you can enlist family, friends and employees to help you pick up extra points and miles, or to meet the requirements for sign-up and spending bonuses. Some cards (like the Chase Sapphire Preferred) may even offer points for adding an authorized user in the first place.
Authorized users can also enjoy card benefits without having to apply for a separate account. Some cards restrict benefits to the primary account holder, but others are fairly generous about sharing perks. For example, The Platinum Card® from American Express lets you add up to three additional cards for $175 (total), and each of those cardholders gets perks like Centurion Lounge access, a $100 Global Entry application fee credit and Starwood Preferred Guest Gold status. And just last week, Citi announced a change that gives Citi AAdvantage Executive World Elite Mastercard authorized users full access to the Admirals Club — and with that card, authorized users are free to add!
The bottom line is that there’s little reason to refrain from adding users to your account so long as you’re confident in the people you authorize. Limit your roster of authorized users to people you trust, and set some ground rules about how they’re allowed to use your card. If you do that, you should be fine.
For more information about credit scores and adding authorized users, check out these posts:
- 5 Lesser-Known Things that Affect Your Credit Score
- Travel Rewards Strategies for People with Low Credit Scores
- Your FICO Score and Which Credit Cards Offer It Free