Our credit card holder completes an "Additional Cardholder" form to identify another person that they would like to have a credit card issued to and they indicate the person's name, address, phone, dob, & SSN. Is it necessary for the authorized user to sign any sort of agreement acknowledging that we will report to credit bureaus, or to acknowledge receipt of the Terms & Conditions for the credit card account? We previously had the cardholder sign an acknowledgment but management wants to do away with that altogether and only have our borrower complete the Additional Cardholder form - and obtain nothing from the authorized user.

What do other banks do?

You cannot report an authorized user to a credit reporting agency - they have no responsibility for payment on the account. They are also not subject to the terms and conditions of the account. Any disclosures associated with the risks by allowing this should probably be going to the account holder.

Thank you!

Randy- reporting authorized users on credit card accounts is a very common practice in today's world and most of the major card issuers participate in reporting authorized users. The term used for the practice is "Credit Card Piggybacking".

https://creditcards.usnews.com/articles/authorized-users-the-pros-and-cons

https://www.bankrate.com/finance/credit-cards/guide-to-authorized-users/

https://www.forbes.com/advisor/credit-cards/how-credit-card-piggybacking-works/

Well, imagine that. I guess you can according to the Metro 2 Guide. It would be ECOA Code 3. I would have never guessed.

So, I guess, if you report them correctly, then that is OK. However, I have no idea how this helps or hurts someone to establish credit. It just means they have access to a card and maybe use it. If I agree to make my daughter an authorized user, I am just not sure how this reflects on her as to whether or not I pay my bill

The official staff commentary on 12 CFR 1026.12 talks about Parents often do this to help their children "build" a credit history.

IMO, the paid piggybacking companies are sketchy.

From what I've read, being an authorized user on a long established account can help a person beginning credit to develop it more quickly, but because they are not liable, it is not a great impact, more like a kickstart. I guess it's success by association. I don't know if there is any negativity if the cardholder defaults. The user still isn't liable for the debt, but does a default cancel the pros of being associated with the account? I'm not sure. Personally, in my mind it is one more issue that devalues the use of a credit report and if it has much impact on the score, again, "I know someone who pays really good" does not make a person credit worthy in their own right.

Might depend on the credit bureau - Experian says they do not.

Just as joining a responsible credit user's account can help you, linking yourself with a less reliable cardholder can hurt you. If the cardholder misses a payment or maxes out their card, your credit could be negatively affected. Some credit reporting agencies, including Experian, do not include negative payment history in an authorized user's credit report. But others may.