What is the process of adding someone as an authorized user on an acct to improve their credit?

Question

If you were to add a person to another's credit card that is in good standings to improve their credit rating, how would that process work? Do they have to go thru the same approval process (credit approval, etc) or do you the authorized user just have to request that they be added to the account?

I think I'm reading some of these answers backwards, but I understand the jist of what is being said. I was referring more to adding my sister, whom I have seen her empty credit report to one of my credit cards that I am in good standing with to up her score rating.

Answer 1

What everyone seems to get confused about is the difference between an authorized user and a joint cardholder. Adding an authorized user WILL NOT affect their credit either positively or negatively. It will show up on their credit as a debt that they can possibly use, but it doesn't affect the scoring or applying for new debt. The risk here is greater for you because since that person is an authorized user, they can run up your debt and not be financially responsible for it.

A joint cardholder holds 50% of the liability of the card. It goes on their credit report, and can/will impact either negatively or positively. In this instance, there is usually some sort of application process--first you add them as an authorized user, then they fill out something and sign it, and then they're joint. That whole process usually takes about a month depending on the company.

Answer 2

Adding someone as an authorized user on one of your accounts is more a service for convenience than it is a way to help someone build credit.

Authorized users don't have responsibility of repayment, so, logically, they don't receive any credit. (No responsibility = no credit). While every lender has a different credit scoring system, and some lenders might view an authorized user account positively, the reality is it doesn't help 99% of the time. In fact, in some strange circumstances, it can actually hurt.

The bottomline is that the BEST way you can help your sister is to loan her the $500 she needs to get her own secured credit card. Make sure the card is actually a credit card and not a debit card, and also make sure they have a program to "graduate" secured credit card users to unsecured users after 12-18 months. Shoot for the lowest annual fee possible and make sure she doesn't use the card more than once.

In the source box, there's a good article for you to read. While it's supposed to be about rebuilding credit after bankruptcy, it's just as applicable to someone with no credit.

One more thing -- if your sister is a college student at an accredited university, she'll probably qualify for a student credit card.

Answer 3

Adding your sister to your account will not benefit her in any way. The account is under your name she will just be an "Authorized User" meaning the credit card Company will not hold her responsible for any charges.

If you want to help her establish good credit there are several things you can do. She must be 18 years old.
1. Co-sign a credit card (new application)
2. Have her get a secured card. She depsoits a min. of $300.00 and she is then issued a credit card with a limit of $300.00 within a year she will get her $300.00 deposit back and she can apply for a regualr credit card.

Answer 4

To get the greatest IMPACT, read carefully:

1. Confirm your friend's or family member's credit card issuer will allow an Authorized User (not a co-signer unless you need a card...however, there is risk to your friend or relative)

2. Confirm the card issuer reports your friend's/relative's account activity for an Authorized User to the Big 3

3. Confirm the card holder has a VISA or Mastercard -- most powerful. Avoid Capital One and American Express...they have a *screwed-up* reporting method which actually penalizes a card holder's FICO. That's a different lesson...and we'll get to it. For now, avoid Cap One & Am Xpress.

4. Confirm the card holder's account does not carry a balance >30% (i.e. balance to credit limit ratio. For instance, the card holder is a model citizen with his/her credit).

5. Confirm the account holder is not late (ever...no 30,60 or even 90 day lates).

6. Confirm the account holder has had the card for at least five (5) years...the longer the better. It's more seasoned.

7. Confirm the account holder regularly uses the card...obviously, there's a benefit to *using* one's credit.

When you're an Authorized User, you do not need to receive a card; therefore, in such cases, there's no risk...to the other person that is.

NOTE: We've made it clear that with no card, there is no risk to your friend or relative. You are now at risk, however! How? Your friend's-relative's account history goes to YOUR credit file. That's AWESOME, provide your friend or relative really HAS the account history he or she has told you. If not, you get your friend's or relative's account history...good or bad.

Absolutely know your friend's or relative's responsibility.

However, if your friend or family member is not straight with you about his/her payment history (lates), seasoning (age of account), cash-to-credit limit (how much is charged to the card versus credit limit ratio), credit limit (what amount), there may not be a benefit to you.

On the other hand, you also may receive a real card with your friend or relative co-signing for you on their account, if that's your intent. More risk but doable.

Answer 5

The card holder is the one who has to add the AU.

Just call and tell them you want to a someone as an authorized user to your account. Have all of the info ready, such as full name (or first & last), address, SSN, etc.

Since the person is only being added for improvment and not for actually using the card, you might request that no AU card be sent. You might also request that they report on that persons credit reports.

They donj't have to go through any approvals.
You could probably also add them to your card online, but then you may not be able to request no card sent and for them to report.

Be sure to be specific, that they are only an AU and not being added as joint.

edited to add
I agree with everything Smoovy said (he must be a much faster typer than me lol)

Answer 6

You can add someone to your account often when the company offers that to a person in good standing. If you have someone on there that is a bad risk credit applicant already they may do a check on them by info supplied and they may be refused or your credit may be at risk. The best way for them to get their credit in better standing is for them to stop spending and keep paying at least the minimum required amount due each month. No one adding them on another credit card will improve their own credit and the person adding them is taking a risk of their credit being damaged by the abusive spender often times. The account holder is liable for any payments due and charges added on there.

Answer 7

Listing them as an authorized user WILL affect credit on both parties. It will be listed as an A ( authorized user) on their credit report. For your credit report, it will only be listed as an individual account- however, for the other person some lenders may use that as credit history even though they were only listed as an authorized user and some don't include it...but ultimately it effects both credit reports. How you pay that card will reflect on their reports just as well as yours. You just simply request an additional card with their name on it. Even kids under 18 are able to be listed as authorized users........

Answer 8

You would want to call your credit card company and ask for another card for an authorized user. They take you through the rest. You would want to ask about their policy regarding reporting on the other user's credit report. You would ask a question like, "does this person's actions affect my credit?"
Of course the answer is yes, then you ask if the reverse is true. Not all creditors let credit information piggyback.

Answer 9

DON'T DO IT!!!! Even your best friend, sister, yada yada yada... It will NOT help their credit. It will only jeopardize yours. If you want to help her, have her open an account (credit card) with you as a co-signer. Then watch it very carefully!!! You are responsible for paying off all the debt she may rack up. As soon as she gets on her feet (a few months, tops!) have her open another account solo, then close the one for which you cosigned. Or have yourself removed from cosigner status. When I say watch the account carefully, I mean do not let the limits raise. Also check the spending on a daily basis. Make sure she's not abusing it and make sure there's no fraud on the account. It might be difficult or impossible to have yourself removed from cosigner status. Might be simpler to close the account when she opens her own. ARE YOU SURE YOU WANT TO RISK THE GOOD CREDIT RATING YOU'VE WORKED SO HARD TO ATTAIN???? I don't think it's a good idea to do any of this.

Answer 10

You can usually call the credit department of the company you have the credit card and they will send you an authorization form to add them. I don't think I would add someone with bad credit to my credit card as they may make your credit bad.