Q: I’m considering adding my 24-year-old grandson as an authorized user on my credit card to help him build credit history. I do not plan to give him access to a credit card. If he messes up his credit at some point, will it affect my score?
A: Short answer? No. Anything your grandson does in the future will not affect your credit score, since your score is based only on your own accounts.
That said, it’s your grandson who could be at risk. “If the credit card he’s added to as an authorized user falls into trouble, for example, if balances run too high or payments are missed, that negative activity would appear on both your credit report and his,” says Michael Lofley, a CFP with HBKS® Wealth Advisors. “In other words, the real credit risk in this arrangement falls primarily on your grandson.”
A potentially better option? Consider a “secured credit card.” “This acts as a line of credit based on an amount on deposit in a bank account, usually a few hundred dollars to start, which a grandparent could provide,” says Michael Pumphrey, a CFP with Tanglewood Total Wealth Management. “This allows the grandson to learn how to use credit wisely, but with the guardrail that they won’t go over the amount they have saved.”
