Credit Card Authorized User

A credit card authorized user is someone allowed by the credit card account owner to use his/her credit card without the liability.

A credit card authorized user is usually a member of the cardholder’s family who is either too young to apply for a credit card or too old to pay for it. In the case of companies, a credit card authorized user usually means employees that are using supplementary cards of a business credit card.

Are there benefits included in being a credit card authorized user? The sole benefit of being a credit card authorized user is that you are free of any responsibility of paying for the bill. Only the credit card account owner is responsible for the charges that are made by the authorized user. This makes a credit card authorized user different from a co-applicant, who also holds responsibility in paying for the credit card’s bills.

Sometimes, people become authorized users of their loved ones’ credit cards in an effort to improve their score or credit rating. This may prove to be futile since most credit card companies do not allow such cases. What they often suggest is for hopeful authorized users to become co-owners of the card, in which case, they share responsibility with the original cardholder in terms of bills. Since only the credit rating of the cardholder will be affected by any activity of the card (whether this is done by the owner or the credit card authorized user), card companies are hesitant on giving perfectly capable individuals free reign on another credit card.

At the other end of the spectrum, there have been reported cases of companies reporting delinquency on the credit card authorized user, aside from the original owner. In this instance, what can an authorized user do? First, s/he should know the rules. Since 2008, FICO has devised new rules in calculating a credit card score. According to it, during instances when a cardholder does not pay, a credit card company has the authority to report the credit card authorized user as delinquent. However, this delinquency status will not affect the calculation of the FICO credit score of the credit card authorized user.

In the event, however, that a credit card company reports the credit card authorized user to a credit bureau for the original cardholder’s faults, the authorized user should immediately compose a letter stating that s/he is only an authorized user and is not, in any way, responsible for the bills of the credit card. It may also be wiser to show the contract of the credit card holder and to ask the credit card company to show proof that the credit card authorized user is, indeed, financially responsible for the card.


Source: Credit Cards For People With Bad Credit Rating

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