Sharing the Credit: Joint Credit Accounts and Authorized User

Posted: May 1, 2013
Sharing the Credit: Joint Credit Accounts and Authorized User

Should you apply for a joint credit card account with your fiancé, spouse, parent,

teenager, college kid or roommate? It’s a tough question – especially of one of you has a rocky credit history. But

there are advantages to joint credit cards or adding an authorized

user to your existing credit account under certain conditions.

Joint account holders and authorized users: What’s the difference?


The difference between a joint account holder and an authorized user is that the

joint account holder is legally liable for paying the credit card balance, and the authorized user can use the card

but isn’t liable for making payments.

Benefits of joint credit accounts and authorized users

As long as you trust the other person on your joint credit card account or the

person you add as an authorized user, it can be a good way to share expenses. But the main benefit of a joint

credit account is that if one person has very good credit and the other does not, the person with bad credit can improve his or her

credit rating and get access to lower interest rates by sharing an account with someone with a good credit score.

However, sharing your account purely for the sake of letting someone with bad

credit fool the credit bureaus is controversial and may not work.

Credit card “piggybacking”

The practice of adding someone who needs credit repair to an existing credit card

account is an old technique, and one that isn’t as effective as it used to be before the credit bureaus caught on

to it.

The way credit card piggybacking works to improve a bad credit rating is that

someone who has an excellent credit score adds you to a well-managed credit card account – preferably one that’s

been open for years – as an authorized user. The card holder’s prompt payment history then shows up on your credit

report and your credit improves as a result.

However, not all credit card companies will report authorized user accounts to the

credit bureaus – in part because the practice has been abused by so many people with bad credit. The FICO credit

scoring algorithm was tweaked in 2008 to help predict authorized user accounts that had been created for the

purpose of “faking” a good credit history.

Drawbacks of joint credit accounts and authorized users

The biggest drawback of sharing a credit card account is that one party might abuse

it and damage the credit scores of both. And if the relationship goes south, it’s even harder to manage the credit

account in the event of a breakup or divorce. With a joint credit account or one in which you’re the main

cardholder and the other person is an authorized user, you could end up paying for expensive items you don’t even


The safer way to have a joint credit card account or add an authorized


If one person on the account has bad credit and was added for the sake of credit

repair, the best thing that cardholder can do is to cut up the card. That way there’s no temptation, no splurges –

and as long as the more responsible cardholder charges little and makes timely payments, that credit score will


If you’re a parent adding a teenager or college student as an authorized user, you

can set a low limit with the credit card company for your child’s charges.

It’s wisest for each person to have his or her own credit card account. But if you

do open a joint account, be sure to talk about the risks first.

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