One inheritance never appears in a will: a credit score. But you can give this gift years before a young person has a job, an apartment, or an idea of what a credit score is for. The tool making this gift possible is the authorized user strategy, sometimes called piggybacking. More families are using this multi-generational plan to help their kids (and grandkids) get a head start.
The idea is simple. You add a teenager as an authorized user to an existing credit card. The account’s clean history flows onto the young person’s credit report, and they benefit from a solid credit rating much faster than it would take to build it on their own. It’s not complicated to set up, but it’s not risk-free, either. The fine print matters more than the headline.
Read:Travel red flags for your credit card
Adding a younger authorized user to a credit card
When you add someone as an authorized user, the card issuer generates a card in that person’s name and ties it to your existing account. Their card number differs from yours, but you’re the primary account holder, still responsible for payment. Once the issuer reports the new authorized user to the credit bureaus, the account’s entire history, including its age, credit limit, and years of on-time payments, will appear on the teen’s credit report.
That last point is key. A credit score depends heavily on your credit history. A teen hasn’t had a chance to establish one yet. Adding them to an account you’ve had for 10+ years, with a perfect payment record, gives them a decade of credit history without waiting. A young adult added to a parent or grandparent’s credit card when they’re still a teen may find it much easier to get loans and credit card approval with more favorable terms.
All you need to set it up is their name, address, and Social Security number. No application, credit check, or minimum credit score required.
Is there a minimum age requirement for getting a credit card?
While some companies may have a minimum age requirement, there’s no legal minimum age to add a minor as an authorized user. It’s best to check your individual credit card issuer’s policies. In practice, the minimum age is 13, but some issuers have different or unspecified age requirements.
The caveat? Just because an issuer allows you to add a 13-year-old to your account doesn’t mean they’re old enough for the responsibility of a physical card they’re free to use.
The pros
This strategy builds credit history quickly when done correctly. Once you add a teen to your account, they inherit the card’s history, and if you both use the credit responsibly, it’ll set them on the path to a solid credit score.
You don’t have to give up control to get the benefit. Since there’s often no minimum age to be an authorized user, you can start building credit for even younger children. You don’t have to give them the credit card, and they don’t have to use it.
When my son was in 8th grade, I added him as an authorized user to one of my credit cards. He was heading to Washington, D.C., for his class trip, and I figured it was easier for him to use a card than take cash. We added the card to his phone’s virtual wallet, and away he went. Now that he’s 16, he has a great rating, and he still uses the card on occasion — but he always asks first.
It’s a teaching tool that, when done well, opens the door to talking to your kids (and grandkids) about money. It helps teach smart money habits. You can talk to them about limitations and good credit habits (and the difference between wants and needs) to help them understand how their spending affects their budget.
The cons
You remain fully financially responsible. This rule is the single most important thing to understand. You’re responsible for all purchases; any spending your child does, responsible or not, appears on your monthly bill.
Bad credit management will hurt you both. Running a high balance or missing a payment negatively affects your and your teen’s credit. And if your authorized user goes rogue, your credit use may spike, which can lower both scores and make it harder to qualify for new credit at good rates.
One final caveat? Not every issuer reports the same way, and policies vary.
The reporting problem because not all cards are created equal
A bit of fine print that catches many well-intentioned families off guard? Setting up an authorized user account doesn’t automatically mean something will appear on the younger user’s credit report. Not every credit card company reports authorized user payment history to credit bureaus, so ask your card issuer about its policies.
For example, Chase’s consumer education page says, “Chase does not report the authorized user credit history of minors to the Credit Reporting Agencies.” That detail is important if you assumed that adding your grandchild to a Chase account would immediately begin building their credit.
Other sources, however, indicate that American Express and Capital One do report authorized users. The takeaway is that policies vary by issuer or the authorized user’s age, and can evolve. The most reliable way to know is to call and ask:
- Does the card report authorized user activity to all three credit bureaus (Equifax, Experian, and TransUnion)?
- Does the policy differ for minors?
(Don’t rely on a blog post for that answer. Best to call.)
Steps to set up your authorized user for credit-building success
- Before adding anyone, make sure your own credit is solid. If your credit history is less-than-perfect, adding a teen could negatively affect their credit.
- Confirm, in plain language, whether the issuer reports authorized user activity to all three age bureaus (and whether age determines reporting policies).
- Have the person’s name, address, and Social Security number handy.
- Optionally, decide whether they’ll have access to the card (or not). Credit-building happens either way.
- Set ground rules, like a spending cap and a plan for them to pay their charges, if they’ll use it.
- Check the credit report together periodically to catch any problems early and teach the young person to read their report.
- Have a general plan for when and how this arrangement will end (i.e., a year after college graduation, or by age 24), rather than letting it run indefinitely by default.
FAQ for grandparents
Grandparents may carry a “what if” anxiety about the plan. Let’s address these questions.
Does the authorized user have legal liability for the debt — and can a grandchild’s poor habits hurt my credit score?
The first half answer is no. Authorized users aren’t legally responsible for charges they make. The cardholder (you) is on the hook legally and financially.
The second half answer is yes. It isn’t so much that your grandchild’s habits will damage your credit score through a separate channel. But spending on the shared account — by either of you — will appear on both credit reports because you’re sharing the credit history. If the authorized user makes a ton of purchases, your credit use could spike, lowering both of your credit scores.
Is it common practice for me to keep the physical card in a drawer instead of giving it to my grandchild?
Yes, that’s normal. You don’t have to give them the credit card, and they never have to use it. The account history benefits their credit whether or not they have the card. It’s a low-risk version of this plan: all the credit history, none of the spending exposure.
If I run up a high balance, how fast does my grandchild’s score reflect it?
Hey, things happen. The car needs a new transmission, or your washer and dryer implode within a week of each other. But sources vary on when a high balance impacts the credit report. It can depend on the card issuer. Impact could begin once it reports an authorized user — usually the next billing cycle — but updates run on a monthly cycle tied to your statement, not instantly. So your best bet is to ask your specific card issuer.
Which credit card companies are best for adding a younger authorized user to my account?
Your best bet is to call your specific card issuer and ask them. Get the answer in writing if possible, because policies can change.
Once the grandchild hits a 750+ credit score, what’s the exit strategy?
Your plan should have begun with this plan in place. Piggybacking isn’t meant to be a permanent arrangement. Once your grandchild has a steady income, help them open their own account, like a student or starter card, while the authorized user history remains active in the background.
Let the new account build for 6-12 months before removing them as an authorized user, which gives it time to age independently. Removing them abruptly, before they’ve established an independent account, could cause a serious credit dip, since a big chunk of credit history simply disappears.
Is the heritage plan worth it?
Adding your grandchild as an authorized user is a good strategy if:
- The issuer will report the activity to their credit report
- The primary cardholder has a track record solid enough to benefit the authorized user
Do your homework first, and you may find it’s one of the simplest, most effective financial gifts you can give as a parent or grandparent.