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Should I Add My Child As An Authorized User?

2018-06-27T10:33:17+00:00June 27th, 2018|Building Credit, David's Class Room|Comments Off on Should I Add My Child As An Authorized User?

There are clear financial benefits to your child if you add them as an authorized user, as long as the card issuer reports these users to one of the three credit bureaus. If they do, then adding your child to your credit card account will make it appear on their credit file. How you use your credit account will not have an effect on the child. All that will appear on their credit history is the account they belong to and its age (how long you’ve had the credit card open for).

Adding a child as an authorized user will begin paying off once they want to apply for their first credit card or loan. Normally, young adults need to apply for student credit cards or credit cards for users with no credit. By adding the child to your account, a score will be generated for them, opening up their options as well as making their loan terms more favorable. For example, having a high credit score can qualify one for lower APR and higher rewards.

Most issuers will allow you to add a child so long as they are at least 13 years old. In certain cases, such as Chase, the online application will only require you to provide a name and address. If that’s the case, you can hypothetically add an individual that is as young as a day old to the card. However, if no social security number is linked to the person, the bank may not send over payment information to the credit bureaus, as they will not have a way to uniquely identify your child.

Though we refer to “your child”, in reality, there is no restriction on who you can add as a user –- even if that person is below the age of 18. There are also currently no regulations requiring that the authorized user be a family member, even if they are a minor. As we noted above, however, some issuers may not report the account to the credit bureaus if the authorized user is not a spouse. Since most of the major credit card issuers don’t abide by this rule, most individuals shouldn’t have a problem with this.