Authorize User vs Co-signer

If you’re looking to help a friend or family member establish good credit, you might be thinking about adding them as an authorized user or even co-signing a loan for them.

Now, adding them as an authorized user can be as simple as filling out their name online and hitting submit, while co-signing tends to be more complicated. Either way, you should know that both options come with risks that can leave you (and your credit) sitting with a lap full of regrets.

That’s why arming yourself with accurate information is so critical. Keep reading to find out the advantages and disadvantages of putting your credit on the line by adding an authorized user or becoming a co-signer for a friend or family member.

Authorized User Advantages

Here are some advantages of adding an authorized user to your account:

  • Builds credit. Adding an authorized user can help to build a solid credit history for those who have none.
  • Easy to Do. Adding an authorized user tends to be a quick process and you may be able to do it without hard credit inquiries.
  • Only primary user is responsible. Authorized users are not responsible for debt, so there is less risk for him or her.
  • Easily removable. You can easily remove the authorized user from the account, often with just a click of a button.  

Authorized User Disadvantages

Here are the disadvantages of adding an authorized user:

  • Bad credit will show. If the primary account holder has bad credit or makes late payments, it will show up on the authorized user’s credit report.
  • Reporting is slow. Accounts could take a while to show up on an authorized user’s credit report. This could be a conundrum if the authorized user is trying to build credit quickly.
  • Authorized user not responsible. The primary user is responsible for all purchases, and the authorized user is not. But keep in mind that a primary account holder can remove the user if spending gets out of control.

Co-Signer Advantages

Here are some advantages of cosigning:

  • Can help establish good credit history. The joint account holder usually has good credit and can help a child or spouse establish credit for the future.
  • Can get a better interest rate. The co-signee may be able to get a better interest rate by signing with someone who has good credit, and it can help to lower payments.
  • Co-signee develops good money management skills. Because the co-signer can watch over the account, the co-signee has an opportunity to learn good money management.

Co-Signer Disadvantages

Here are some disadvantages of co-signing for a loan:

  • Credit mismanagement.  If the co-signee fails to make on-time payments, delinquencies can be reported on the co-signer’s credit.
  • More labor-intensive. A co-signing application takes time and effort to complete, and each borrower on the joint account will receive a hard inquiry.
  • Hard to remove co-signers name. Once a co-signer signs for a loan, it can be difficult to remove their name from the account.
  • Lasting effects. If a joint account becomes delinquent, the negative marks can stay on both account holders’ credit reports for many years.

The Verdict

The bottom line is, your credit is NOTHING to play around with. So as long as you trust your friend or family member to do the right thing to protect your credit rating, then you might want to consider adding them as an authorized user on one of your credit accounts.

This way, you can “test” out your credit relationship before entirely putting your credit on the line by co-signing for a loan.


Authorized user and co-signer both have pros and cons, but the authorized user method tends to be easier to do, with less risk. No matter which method you choose, be sure to monitor your credit report regularly. Want more credit advice? Schedule a Free Consultation and begin your journey to better credit today.

Related Articles