May
25
2011

Adding daughter as authorized user can help build credit history

Dear Experian,

Will adding my responsible adult daughter (age 24) as an authorized user to one of my credit card accounts help to build her credit?

- CCA

 

Dear CCA,

Adding your daughter as an authorized user will help her establish a credit history because the account will appear on both your credit report and hers.

As an authorized user, your daughter will have permission to use your account, but she won’t have any responsibility for the debt. Therefore, if for any reason you fail to pay as agreed, the lender will remove her name from the account upon request and the history will disappear.

While authorized user accounts are sometimes a good place for young people to start building a history, they won’t necessarily help her learn to use credit well so that she will continue to build and maintain positive credit references over time.

To ensure your daughter learns to manage credit accounts, consider making her responsible for paying the bill each month, even if you deposit the funds into her checking account. Work with her to establish how much she can spend each month and let her learn to manage her spending to that amount.

At some point you might consider making her a joint account holder so that she would be equally and fully responsible for the debt.

However, you should weigh the decision to add her to your account very carefully because any issues with the account will impact each of you equally.

You say that she is responsible, so this is the perfect time to teach her how to manage credit cards to enjoy the benefits and avoid the debt.  That is one of the most important life lessons a parent can give their child.

Thanks for asking.

- The “Ask Experian” team

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