If your boyfriend doesn’t have a credit history and you want to help, you can share one of your accounts with him. The account would show up on his credit report and his creditworthiness will build. However, there are two ways to share an account and it is crucial to know the difference between them. Plus, you do want to weigh the good with the bad when it comes to sharing an account in general.
Authorized user vs. joint account holder
As the first sharing method, adding your boyfriend as an authorized user grants him permission to use your account (with his own card), but he is not responsible for the bills and has no power to make changes to the account. The second method, making him a joint account holder, gives him equal responsibility for the account, including the bill, and gives him the power to make changes to the account. Since your boyfriend lacks experience with credit, we would not recommend adding him as a joint account holder.
Pros and cons to adding an authorized user
Making him an authorized user satisfies a happy medium: You can help your partner build his credit without losing autonomy of your finances. Still, consider if your help is necessary. This decision is not to be taken lightly, so weigh the following pros and cons.
- Help him build credit. Assuming you have good credit card habits (on-time payments, low debt-to-credit ratio, etc.), that will be reflected on his credit report and help him build good credit.
- Earn more points. If it’s a rewards card, his purchases will also count toward your rewards points, so you can get to your reward goals that much faster. Some credit card companies also give bonus points for adding an authorized user.
- You maintain control. As the account holder, you have the power to control his spending. You can accomplish this in one of two ways. First, don’t give him a physical credit card, and he can’t spend on your account at all. Some credit card companies will let you choose if you want a physical card for your authorized user. Otherwise, the authorized user’s card is mailed to the account holder, so you have the option of passing it along to him or not. Second, your credit card company may allow you to set spending limits for authorized users. If so, you can decide how much he is allowed to spend on your account. Since he has no power to make changes to the account, he cannot request a card for himself or change his spending limit.
- You are liable for his spending. If he has a card and you choose not to or are unable to set a spending limit for him, he might run up a lofty bill for you. Even if he has every intention of being responsible, people have a tendency to spend more money when it’s not their own. This is especially worrisome if you break up. If you don’t remove him from your account right away, he has the power to do a lot of damage to your finances. And he won’t be liable for any of it.It could hurt your credit. He could max out your card or even just put a high balance on it. Since one of the factors that affects your credit score is debt-to-credit ratio, that could have a negative impact on your credit.
- It could hurt his credit. On the flip side, if your credit card habits aren’t so great, it could hurt his credit. Missing or making payments late or racking up high balances yourself will have the same negative impact on his credit. Also, when he is removed from your account, there might be a dip in his credit score. Make sure that he opens his own credit card as soon as he begins to establish credit so he can continue building his own credit rating after you remove him.
If you take the proper precautions, you can easily add your boyfriend as an authorized user, help him build credit, and protect your credit at the same time. Without the proper precautions, though, it could just as easily hurt you both.