Can I Build Credit History as an Authorized User?
Yes, an authorized user can build credit history.
An authorized user is someone who is added to another person's credit card account and authorized by the principal cardholder to use that account. The authorized user receives a credit card with his name on it and is able to use the credit card as if it were his own.
Payment history for that credit card is now reported to both the principal cardholder's credit report as well as the authorized user's credit report, regardless of whether the history is good or bad. That means the authorized user's credit can benefit from the relationship, but it can also suffer if debt accumulates and payments are late or not made at all.
Reporting of payments only flows one way, however, and the authorized user's finances outside of the credit card they have in common will not affect the principal cardholder's credit.
Liability for all charges to the card, however, lies solely on the shoulders of the principal cardholder. Although damage can be done to the authorized user's credit rating, only the principal cardholder is legally obligated to paying the outstanding debt.
Authorized users are most commonly children or a spouse of the principal cardholder.
Please visit our Featured Articles section to read the Creditnet article regarding recent changes involving authorized user accounts to the credit scoring model.
