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Why Did My Credit Score Drop When I Was Added as an Authorized User?

By Lauren Ward · August 26, 2024 · 6 minute read

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Why Did My Credit Score Drop When I Was Added as an Authorized User?

While there are many benefits to being an authorized user on another person’s account, you risk damaging your credit score if the primary cardholder isn’t responsible with the account.

Let’s take a look at the pros and cons of being an authorized user and how to prevent a credit score drop after being added to someone else’s account.

What Does It Mean to Be an Authorized User?

An authorized user means you’ve been added to another person’s credit account and can use it to make purchases. You’ll also receive your own card, though you can’t see the primary cardholder’s charges nor will you receive a bill. The primary cardholder is responsible for any charges made on the card.

The move comes with several benefits. You can have immediate access to credit without the need for a credit inquiry. Plus, it’s an opportunity to establish a credit history or help repair or build your credit.

However, there are limitations worth noting. The biggest one is that the primary cardholder’s behavior reflects on you. If he or she routinely misses payment due dates or uses up most of their available credit, for instance, your credit score (and theirs) can take a hit. What’s more, you can’t make changes to the account or add other authorized users, and you won’t be able to ask for credit limit increases.

If you find yourself stretching your finances every month, consider using a budget. A spending app can help you create a budget and spot upcoming bills.

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How Being an Authorized User Affects Your Credit

When you’re added as an authorized user to an account, your credit could be impacted positively or negatively — or not at all.

For instance, if you’re added to an account with a record of timely payments, your credit score may improve. If you’re an authorized user on an account that’s not in good standing, your credit score could suffer. And if the credit card issuer doesn’t report authorized user activity to any of the three credit bureaus, your score won’t be impacted. 

Credit score monitoring services can help you keep tabs on any changes in your credit score and see an overview of your debt balances. 

Recommended: Why Did My Credit Score Drop After a Dispute?

Who Should You Ask to Add You as an Authorized User?

Oftentimes, being added as an authorized user on a credit card account can help you establish credit or increase your credit score. But keep in mind that the primary cardholder is responsible for making payments, and the card’s use will be reflected on both of your credit reports. 

Trust is key, so only consider asking someone who has a positive payment history, good spending habits, and low credit utilization ratio. 

How to Add an Authorized User to Your Account

The process of adding an authorized user to an account varies by credit card. But generally speaking, you should be able to handle it online or by calling the issuer directly.

When adding an authorized user, you will likely need to know their personal information, such as their address, phone number, and Social Security Number. Once you’ve submitted your request, your credit card company should mail a new card to the authorized user. 

How to Remove an Authorized User From Your Account

The easiest way to remove an authorized user from your account is to contact your credit card company’s customer service department. However, depending on the card, you may be able to take care of this online. You’ll likely be asked to verify your account information.

Does Removing an Authorized User Hurt Your Credit Score?

Removing an authorized user from an account may not hurt your credit score, but it could impact theirs. If the card has a long record of on-time payments and low credit utilization, that positive history will be removed from the authorized user’s credit report. And if the account has been open for a long time, it could also decrease the average length of their credit history.

However, the authorized user may see a boost in their score if they’re removed from an account with a history of late or missing payments or high credit utilization.

Recommended: How to Check Your Credit Score Without Paying

How Does an Authorized User Build Credit?

Before you’re added as an authorized user, it can be helpful for you and the primary cardholder to understand the factors that affect your credit score. Here’s what goes into your FICO™ Score, which most lenders use.

•   Payment history

•   Amounts owed

•   Length of credit history

•   New credit

•   Credit mix

Of those five factors, payment history and amounts owed have the biggest impact on your credit score. So ensure the primary cardholder makes on-time payments and avoid carrying a high balance, which can affect your credit utilization ratio.

How Fast Does an Authorized User Build Credit?

How long does it take to build credit? Credit card companies typically report activity to the credit bureaus every 30 to 45 days. 

Pro tip: You can often check your credit score for free through certain banks and credit cards. Many financial institutions will give regular credit score updates as a free service to their customers. 

If yours doesn’t offer this service, you can sign up for a credit score monitoring service or use a tool like a money tracker app.

Difference Between Authorized User vs. Joint Account Holder on a Credit Card

Though both share an account with another person, there are some important differences between an authorized user and a joint account holder.

Most notably, a joint account holder is equally responsible for making payments on the account, while an authorized user is not. Also, when you apply for a card as a joint account holder, the credit card issuer will perform a hard inquiry, which could cause your credit score to drop temporarily. A hard inquiry is generally not required when adding an authorized user.

Pros and Cons of Being an Authorized User

Becoming an authorized user on an account comes with its share of benefits and drawbacks. Here are a few things to consider:

thumb_upPros:

•   Immediate access to credit 

•   Could help you build or improve your credit

•   No responsibility to pay the debt

thumb_downCons:

•   May damage your credit score if the primary cardholder fails to make on-time payments or keep balances low

•   Risk damaging your relationship with the primary account holder

•   No control over account

The Takeaway

Being added as an authorized user can help you build or improve your credit, but in some cases you may notice a drop in your credit score. This often happens when the account is not in good standing, perhaps because of late or missed payments or a high balance. To help protect your (and the account holder’s) credit score, ensure bills are paid on time and keep credit utilization low.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Will being added as an authorized user hurt my credit?

While becoming an authorized user can help your credit, there are times when it can have the opposite effect. For instance, if you’re added to an account that has a history of missed payments or the credit utilization ratio is too high, your credit score could fall.

How many points does your credit score go up as an authorized user?

There’s no set number of points you receive when you become an authorized user. However, if the account you’re associated with is in good standing, you may see an increase in your credit score.

How long does an authorized user show on a credit report?

Generally speaking, it takes a month or two after you’ve been added as an authorized user for the account to show up on your credit reports.


Photo credit: iStock/Milan Markovic

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