If you’ve got your parents’ credit card in your wallet, even if it has your name on it, you’re likely an authorized user. It’s a super common way that families share money. When it comes to credit scores, it can be a way to help build your credit before you turn 18. Being an authorized user also keeps you from having to navigate the process of obtaining a student credit card or a normal credit card while you’re in college. All that said, there are some definitive pitfalls to being an authorized user that we should talk about.
What does it mean to be an authorized user?
When someone gets a credit card, they’ll usually have the option to add authorized users onto their account. For example, if your parent opens a credit card under their own name, they can give you a card with your own name on it too - though the card is still tied to their account.
All the purchases that an authorized user makes are are the responsibility of the accountholder. So when you’re an authorized user on your parents’ credit card, they’re ultimately responsible for what you charge to the card.
Does being an authorized user build your credit score?
If you look around for the answer to this question, you’ll find a pretty resounding yes - as long as the account holder is being financially responsible. If the account holder isn't paying their bills on time, it could be negatively impacting your score. If this is the case, you can ask to be taken off as an authorized user or you can contact the card company to request that they remove you. However, it’s true -in many circumstances, being an authorized user can be a good way to kickstart your journey towards a great credit score.
But, as we mentioned, as an authorized user you’re not an account holder. You’re reported to the credit bureaus as an authorized user - and some cards don’t report authorized user data at all. Think of it as creating a soft credit score. Being reported as an authorized user doesn’t necessarily increase your chances of being approved for other lines of credit. A lot of times it leaves you with a high score without an accompanying history of having your own account. For many lenders, that’s the same as having a low score - or no score at all.
Why you should have your own line of credit in college
Look, if you want to keep a parent’s credit card in your back pocket in case of emergencies, we won’t blame you. But there are a handful of reasons why you should look elsewhere for your day-to-day spending as soon as you start college. And a Fizz card is a great way to do so.
Build a more robust credit profile. Being an authorized user on someone else’s account is only going to carry you so far. You might have a high score, but your profile won’t actually show you as being an account holder yourself. Having your own account will make it way easier to get approved for things like apartments, car loans, and other credit cards down the line.
Rewards! When you’re an authorized user, any rewards you generate from your spending will go straight to the account holder. Wouldn’t you rather be rewarded for your own spending?
Financial literacy. If you’re swiping your card and letting someone else worry about the bill, you’re building a pretty suboptimal financial habit. Having you own card that you alone are responsible for can help you build great financial habits that will set you up well for the rest of your life.
So, why is Fizz better?
A Fizz card is the best option out there for college students looking to build credit, earn rewards, and build towards financial independence. With Fizz, you won’t have to worry about the small stuff. We don’t let you spend more than you have and your purchases are paid off every day so they don’t pile up.
Fizz is your own card. It’s your own account, attached to your name, and it helps build your credit while earning you rewards. In terms of financial independence, it’s way better than just being an authorized user. Plus, we’ve got loads of financial resources to help you get ahead and stay ahead. So what are you waiting for! Click the button below and join Fizz today.
Sam is a Kenyon College alum and is head of content at Fizz. He's been a go to personal finance resource among his peers since getting his first credit card during his sophomore year of college. He hails from Washington, DC, loves all things aviation, and currently lives in Los Angeles.