Credit Card Co-Signers vs. Authorized Users — Differences Explained


Getting your first credit card can be an exciting milestone. You start to picture all the responsible things you’ll do with it, like putting your bills on autopay, getting extended warranties on vital electronics like laptops and cellphones, and collecting and cashing in all those sweet, sweet rewards points.  

But sometimes, your credit history doesn’t meet the requirements for approval. Fortunately, there are options available to help you secure a credit card and start building your credit. 

Two common approaches are having a co-signer or becoming an authorized user on someone else’s account. However, these credit relationships are more complex than they appear at first glance. It’s essential to explore the differences between co-signers and authorized users before you even ask someone.


Co-Signer vs. Authorized User: What’s the Difference?

Co-signing involves you having your own credit card, whereas an authorized user is something you become. Both could give you access to a credit card and improve your credit history, but both roles also have credit implications and unique responsibilities. 

What Is a Co-Signer?

A co-signer essentially lends their creditworthiness to support your credit application. 

If you don’t meet the issuer’s requirements, such as having insufficient income or a problematic credit history, you can find someone who has good enough credit to act as a co-signer. And even if you do qualify, having a co-signer with better credit might get you more favorable terms, such as a lower interest rate.

The credit card company checks both your credit before deciding to issue you a credit card. And by co-signing, they become just as legally obligated for the debt as you are. 

So expect your co-signer to want to stay informed about the account’s activity and take measures to ensure timely payments. They have a personal stake in your financial responsibility. That’s why co-signers are typically trusted family members or close friends.

Co-signing a credit card can have a significant credit score impact, both on you and your co-signer. The account activity, including payment history and credit utilization, shows up on both parties’ credit reports. 

Any late or skipped payments, high balances, or defaults can negatively affect the credit scores of both individuals. That’s because co-signed debt appears on the co-signer’s credit report just like any other financial obligation, potentially impacting their ability to take on new credit or loans of their own. 

And if you don’t pay up, the co-signer has to pay the entire debt, including any accrued fees or interest. If they don’t, you could both face lawsuits, wage garnishments, and severe credit score damage.

On the plus side, responsible credit management on your part can benefit both parties and help improve both your credit profiles.

Unfortunately, it can sometimes be difficult for them to get removed as a co-signer. Check the card agreement for a co-signer release option. Even if there is one, for them to get released, you must have a good payment history so the lender feels confident relieving them of co-signer responsibilities.

And if things go south, it can strain your relationship and have long-term financial consequences if you aren’t careful.

If you’re not 100% sure you can use the credit card responsibly, it’s probably best to seek out other options. It’s not worth destroying a relationship over.  

What Is an Authorized User?

An authorized user is someone the primary borrower adds to their credit card. 

An authorized user shares no legal responsibility for the debt, meaning they don’t necessarily make payments. They just have permission to make purchases on the account. But if you’re just trying to build your credit history, it can help to have someone add you to a card that reports on authorized users’ credit too (which is most of them).

When the primary account holder adds you to their account, you receive a card with your own name on it. The primary account holder retains control over the account and can monitor your spending activity. So it’s crucial to discuss upfront whether there are any guidelines they’d like you to follow.

For example, they may ask you to limit purchase totals to a certain amount, use the card only at certain locations or for specific reasons, or only use it if you can pay them back. They can swiftly cancel your card if you violate any of the rules.

It’s most common to become an authorized user on the cards of family members or trusted individuals. They may be willing to grant access to the account for various reasons, such as building credit, convenience, or sharing expenses.

Being an authorized user can have both positive and negative impacts on your credit. The account’s history, including payment behavior and credit utilization, is typically reported on your credit report as well. If both you and the primary account holder demonstrate responsible credit management, such as making timely payments and maintaining low balances, it can have a positive influence on your credit score.

But if the primary account holder has a history of late payments, high balances, or defaults, it can negatively affect your credit profile. You can also negatively impact their credit rating by charging too much or failing to pay them as agreed so they can afford the monthly payment.

As an authorized user, you don’t have the same level of control or decision-making power as the primary account holder. That means they can cancel the account, revoke your access, or make unexpectedly bad decisions that negatively affect your credit.

You’re not legally responsible for the debt incurred on the account, but you are ethically responsible if you agreed to pay. And there’s nothing to stop them from suing you if you don’t hold up your end of the agreement. 

Additionally, pretty much everyone else involved is going to act like the account holder is doing you a favor — probably because they are. So you’re unable to access certain account features or make changes to the account. 

It’s essential to establish clear communication with the primary account holder to understand any restrictions or guidelines associated with your authorized user status. And if your primary goal is improving your credit score, it’s critical that you become an authorized user with someone who has good or excellent credit on a card that reports on the authorized user’s credit. 


Key Differences Between Co-Signers & Authorized Users

Co-signers and authorized users are pretty much opposite in terms of their rights and responsibilities. The only thing they have in common is how it affects their credit score. 

Co-Signer  Authorized User
Definition Personally guarantees repayment Granted permission to use someone else’s credit card
Role Repays debt if you don’t Authorized to make purchases
Credit Check Yes No
Credit Impact Activity affects credit reports of both parties Activity may or may not impact the credit report of authorized user
Financial Risk Obligated to repay the debt if the borrower defaults No legal obligation for the debt
Control Has access to account information and decision-making Account control remains with the primary cardholder
Relationship Typically trusted family members or close friends Often family members or individuals with shared needs
Easy to Remove Only once you meet co-signer release threshold Yes

Should You Use a Co-Signer or Become an Authorized User?

You may find a credit card co-signer is the best option if you have credit or income issues. But you should only do it if you have no other option for getting credit. And consider whether you can just wait a bit and improve your income or credit score enough to qualify alone.

And you need someone willing to take on the risk as your co-signer. They should know you well enough to trust that you’ll pay your card on time, and you should also feel confident you can. The co-signer also needs to have good enough credit to qualify.

Using a co-signer can cause awkward situations and disagreements, so if you want to maintain a good relationship, think twice. After all, the person puts their finances and credit on the line for you. Running up charges or missing a payment can easily cause issues.

When deciding whether to add an authorized user, consider whether you trust the person to spend responsibly and pay you back as agreed. Even when they use the card, you’re the one stuck with the debt. So, you can easily end up with financial strains and a dinged credit score.

While you might intend to help a loved one build their credit as an authorized user, don’t disregard how it could affect your relationship. Arguments can happen if the person runs up your balance or doesn’t pay you back. This makes a usage agreement with the person crucial.

If you have any doubts about letting the person access your credit card, it’s safer to just not agree to make them an authorized user. Instead, you could help them create a budget and find other ways to build a credit history. That way, they can eventually get credit on their own.


How to Add a Co-Signer or Authorized User to Your Account

If you want to add a co-signer to a credit card application, first ensure your prospective creditor allows it. Unfortunately, most major banks no longer allow the practice. However, you may have better luck going through a smaller bank or credit union.

Depending on the creditor, you may have options to apply online, by phone, by mail, or even in person. In all cases, you must supply personal and financial information for yourself and the co-signer. Exactly how that works depends on how you apply.

  • Online: You both digitally sign and submit the application. 
  • Phone: The creditor may need to speak with the co-signer in addition to the borrower.
  • Mail: You must both fill out and sign the application, then mail it to the listed address.
  • In Person: You must both fill out and sign the application, then you must both go to a branch in person.

The creditor runs both your credit files. Then depending on how you applied, you may find out instantly whether you’re approved or have to wait for an email or even a letter.

If you want to add an authorized user, you’ll have better luck since most card companies allow it. You can either do it when you fill out your application or after you’ve opened the account. Either way, the process is straightforward, and you can do it online, by phone, by mail or in person

When applying, there’s a step to add authorized users. If it’s an existing account, you can log into your online portal, contact customer service, or if it’s at your bank, just walk in. 

The creditor won’t run a credit check, but they do need some information about the user. Common information requested includes the authorized user’s full name, birth date, Social Security number, address, and relationship to you. The user should receive their card upon approval.


Final Word 

Becoming or adding a co-signer or authorized user is not a decision you should take lightly. Both parties must feel comfortable with the responsibility and trust they’ll act in each other’s best interest. Otherwise, you risk a messy situation in which both parties’ finances and relationships are at risk. 

Communication and financial planning is key. If you use a co-signer, budget for your monthly payment and don’t carry a high balance that can harm you both. And if you add an authorized user, set limits with them and don’t hesitate to revoke their access if needed.

If your finances or relationships are too big a risk, other options exist for those who struggle to qualify for regular credit cards. Backed by a security deposit, a secured credit card involves a much easier approval process and can help with building credit for easier borrowing experiences later.



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