Should You Add a Loved One as an Authorized Cardholder to Help Their Credit?

Do you have a loved one with bad credit? Are they trying to repair it, and even making some good progress on their own? If so, you might be thinking about helping them fix their credit even more by adding them as an authorized user of one of your credit card accounts.

Let’s look at why you might want to do this and a few things you should think about before making this big of a decision (with the potential to damage your own credit).

Why You Might be Considering It

It’s understandable that you might want to help out a family member or other loved one. And adding them as a co-owner of an account in good standing (like your own) can help them rebuild their own positive credit history and improve their credit score. In essence, it puts your good history under their name too, making it a part of their credit history. It won’t necessarily reverse all of the previous damage, but it can get their credit back on the right track. But should you do it?

How to Make the Right Decision for You

Here are some things to take into consideration when deciding whether or not you should add a loved one to an existing credit card account to help them improve their credit history.

• Are you really ready to be responsible for someone else’s financial actions? If the person you add to your account racks up credit card debt and doesn’t pay, you can be held responsible for it.
• Has this person’s financial behavior really changed for the better? If there isn’t already evidence that they’re cleaning up their credit history on their own, it probably isn’t a good idea to gamble with your own credit.
• Will adding them to your account actually help this person? For example, if your account is brand new, it could decrease the average age of their credit history (which isn’t a positive thing). And if your account is already delinquent, your past credit problems could simply add to theirs.

Whether or not you should add someone else to your credit card accounts is a very personal decision to make. What might be a great way to help a family member for someone else might be a recipe for disaster in your own situation. In the end it comes down to trust.

Have you ever helped a loved one repair their credit history by adding them to a credit card account of yours? How did it turn out? Would you do it again? What advice would you give to other consumers thinking about doing the same? Leave a comment to share your thoughts.