Second cardholder

by Karl
Updated: July 2, 2018

How sharing an account affects the credit profiles of the second cardholder and the account owner

Sharing an account establishes a financial connection between the account owner and the second cardholder. The account will appear on the credit file of the second cardholder who will inherit its history. The account owner remains fully liable for the account.

If the account owner manages the account badly (or the account is new or has a low credit limit) then the implications for the second cardholder are negative.

The account owner probably stays insulated from the credit history of the second cardholder but has potentially increased liability.

When you are the second cardholder

If the account has been well managed (no late payments), is not new and has a high & mostly unused credit line, it can boost the credit score of the second cardholder.

This can be helpful if they are applying for new credit, e.g. child without any credit history or partner trying to rebuild credit history after some financial disaster.

If any of the opposite situations apply, e.g. if the account owner pays late or runs the balance close to the credit limit, it will adversely affect the second cardholder’s credit score.

If someone adds you without your authorization (as happened to me) you can contact the lender and credit bureaus directly to get the second card canceled and removed from your credit report. I did this immediately so I don’t know if you can do this after you’ve had the account on your report for a while.

If you’re (re)building credit it is wise to plan on any second cards eventually being closed and concentrate on building your own independent credit history.

When you are the account owner

The main direct advantage to the account owner is if the account earns rewards and the second cardholder earn a lot of rewards.

It’s possible that high usage may prompt an automatic credit increase, but high balances will have a negative effect on credit score and exceeding credit limits is generally a bad idea.

It’s obviously not sensible to issue a second card to someone you can’t trust.

The account owner is always liable for all spending on the account and may not get the usual protections on purchases made by the second cardholder (check the fine print of your agreement).

Financial connection

Whether or not you can see evidence of how a financial connection affects your creditworthiness, these things are real. If you permit yourself to become associated with anyone who has a bad credit history it will have consequences.

Summary

Either way, my advice is don’t do it.

More info

“Benefits and Costs of Adding Additional Cardholders on Credit Cards” at thepointsguy.com.

“How Does Being an Authorized User Affect My Credit Score?” at creditsesame.com.

“Authorized User vs. Joint Cardholder: Choose Wisely, Spare Your Score” at nerdwallet.com.

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