You can allow someone else to be added on your credit card account. You have the option to allow him to spend money on the account or just piggyback for purposes of enhancing his credit score. Should you give that person a credit card, he needs to know how to keep credit card account information secure with methods such as checking receipts for accuracy, using only trusted locations and websites, not sharing card information by email or text and shredding monthly statements.
If you've determined it is someone you trust, you can request an extra credit card for him, complete with his name on it. As an authorized user, the person has the ability to make charges on the account up to the limit. As the primary account-holder, any charges made by the authorized user are your responsibility. The card issuer has no contract with the authorized user to repay any of the charges on the card.
The decision to allow the authorized user to have his own card and make charges on it is entirely yours, since you can withhold the card from him. The major benefit is that if the user is having trouble establishing a credit history on his own, it doesn't involve a credit check to add him to the account. In addition, his credit report will be populated by the repayment history of the card, and your credit history pertaining to the card will show up on his credit report.
It can be problematic if the authorized user runs up large charges, resulting in a higher than usual monthly bill for you. This can create a difficult situation for everyone if the charges are large enough that funds are unavailable to meet monthly payments. If the idea was to boost his score, the reverse will be the case if your credit use goes up and you make late payments that show up on both your credit reports. At the extreme, collections actions or lawsuits may be leveled against you, further damaging your scores.
Having a signed agreement will help mitigate unpleasant surprises and any misunderstandings regarding card use. Ask the issuer if it can set a specific credit limit for the authorized user’s charges. Alternatively, instead of adding him as an authorized user, make him a joint account-holder. You will both have shared legal responsibility for account payments, and credit reporting will apply to both of you.
Dr Jack Gordon, the Chief Technology Officer at Strontium Logistics, is a 20-year veteran of the engineering and marketing business who favors stiff drinks, good debates and developing innovative digital marketing strategies to help companies grow.