Being added as an authorised user on someone else’s credit card can be a helpful way to start building or improving your credit history, but it comes with both benefits and risks.
This guide explains how authorised user status works under the credit reporting system, how it can help or hurt your credit, and what to consider before becoming (or adding) an authorised user.
What Is An Authorised User On A Credit Card?
An authorised user is a person who is given permission by the primary cardholder to use their credit card account. The authorised user usually gets their own physical card with their name on it and can make purchases up to the credit card’s limit, but they are not legally liable for the balance or repayments.
The primary cardholder remains fully responsible for all charges made on the account, including those by authorised users. This arrangement is commonly used by couples, family members or close friends to share spending power or to help someone build a credit history.
How Authorised User Accounts Appear on Credit Reports
Under the comprehensive credit reporting (CCR) system, credit providers (like banks and credit card issuers) report detailed information about accounts to credit reporting bodies such as Equifax and Experian.
Whether an authorised user’s account appears on their credit report depends on the card issuer:
- Some credit card issuers report the account as an “authorised user” or “secondary cardholder” on the primary cardholder’s file, and this information may also be included on the authorised user’s own credit report.
- Other issuers may only report the account under the primary cardholder’s name, in which case the authorised user’s credit file will not show that account at all.
If the account is reported, the following details may appear on the authorised user’s credit report:
- The limit of the card
- The current balance and credit utilisation
- Payment history (e.g., which can affect the length of credit history)
- The age of the account (which can affect the length of the credit history)
Because not all lenders report authorised user activity, it is worth checking with the card issuer or reviewing your credit report to see if the account is being recorded.
How Being An Authorised User Can Help Your Credit Score
When managed responsibly, being an authorised user can support a stronger credit profile in several ways.
Builds a Longer Credit History
Credit scores consider the age of your credit accounts. If the primary cardholder held the card for many years with a good repayment history, that positive history may be reflected on the authorised user’s report, helping to lengthen their credit history.
Improves Credit Utilisation
Credit utilisation (the amount of credit used compared to the total limit) is a key factor in credit scoring. If the primary cardholder keeps the balance low relative to the credit limit, this can help lower the authorised user’s overall utilisation ratio, which is typically good for their score.
For example: if the authorised user has their own credit card with a high utilisation ratio, being added to a card with a large limit and low balance may improve their overall credit utilisation and support a better score.
Adds Positive Payment History
If the primary cardholder consistently pays the bill on time, that positive payment history may be reflected on the authorised user’s credit report. On-time repayments are one of the most important factors in building a good credit score.
Over time, this can help someone with a thin file (few credit accounts) or damaged credit history to rebuild their score.
How Being An Authorised User Can Hurt Your Credit Score
While there are benefits, there are also risks to being an authorised user, especially if the primary cardholder does not manage the card responsibly.
High Credit Utilisation
If the primary cardholder runs up a large balance relative to the credit limit, this can increase the authorised user’s over-credit-utilisation. High utilisation is generally seen as a sign of higher risk can lower the authorised user’s credit score.
For example: A card that is consistently near or at its limit may have a negative impact, even if the authorised user is not the one making the purchases.
Late or Missed Payments
If the primary cardholder pays late or misses payments, this negative payment history may be recorded on the authorised user’s credit report. Late repayments can significantly damage a credit score and stay on the report for 2 years.
Because the authorised user has no control over the primary cardholder’s behaviour, they are exposed to this risk simply by being linked to the account.
Account Defaults or Serious Credit Infringements
In the worst case, if the account falls into serious arrears and is reported as a defaulted or serious credit infringement, this can severely damage the authorised user’s credit history, even though they are not legally liable for the debt.
Defaults can remain on a credit file for up to five years and make it harder to get approved for loans, credit cards, or even rental agreements.
How It Affects the Primary Cardholder’s Credit
Adding an authorised user does not, by itself, directly harm the primary cardholder’s credit score. However, what matters is how the account is used and managed.
- If the authorised cardholder spends heavily and the balance rises, this increases the primary cardholder’s credit utilisation, which can negatively affect their score.
- If payments are late or missed, both the primary cardholder’s and authorised user’s credit reports may show negative marks.
- Multiple credit card accounts with high balances can also make the primary cardholder appear riskier to lenders when applying for new credit.
Some Australian credit cards allow the primary cardholder to set spending limits or monitor transactions for authorised users, which can help manage risk.
Practical Tips
If you are thinking about becoming an authorised user (or adding someone as one), here are some practical steps to protect your credit:
Check with the Card Issuer
Before agreeing, ask the credit provider whether they report authorised user accounts to the credit bureaus. If they do not report this information, the arrangement will not help build the authorised user’s credit history.
Review Your Credit Report
Both the primary cardholder and the authorised user should obtain a free copy of their credit report from Equifax or Experian to see how the account is being recorded. This helps confirm whether the account is listed and whether any negative information is present.
Set Clear Ground Rules
Discuss spending limits, repayment expectations, and how the card will be used. Even though the authorised user is not legally liable, the primary cardholder may expect them to contribute to repayments, so it is important to agree on this upfront.
Monitor the Account Regularly
Both parties should keep an eye on statements and balances. If the primary cardholder starts missing repayments or the balance becomes very high, the authorised user may want to consider being removed from the account to protect their credit.
Know How to Be Removed
If the arrangement is no longer working, the primary cardholder can usually remove the authorised user by contacting the card issuer. Once removed, the account may eventually stop appearing on the authorised user’s credit report, depending on the lender’s reporting practices.
When Being an Authorised User Might Not Be Worth It
Being an authorised user is not always the best option for everyone. It might not be suitable if:
- The primary cardholder has a history of late repayments or high credit card balances.
- The card issuer does not report authorised user activity to credit bureaus.
- There is a lack of trust or clear communication about spending and repayment.
In these cases, it may be better for the person to apply for their own credit products (such as a credit card or a small personal loan) and build credit independently.
Conculsion
Being an authorised user on a credit card can be a useful tool for building or improving credit, but it is not without risk. The key is that the primary cardholder must manage the account responsibly, with low credit utilisation and on-time repayments, for the authorised user to benefit.
Before agreeing to become (or add) an authorised user, both parties should understand how the account will appear on credit reports, set clear expectations, and monitor the account regularly. By doing so, they can make the most of the benefits while minimising the potential downsides to their credit.
