One benefit of the Chase United MileagePlus Explorer card (Flyertalk link) is getting an additional 5000 bonus miles for adding an authorized user. To add an authorized user, all you need to do is call Chase and give them a name, and then Chase will send you a new credit card with that name on it.
Question #1: What is an authorized user?
An authorized user is someone who’s allowed or authorized to use your credit card. This means that the person is allowed to spend as much money as he wants, but he doesn’t have any responsibility to repay any debt that accumulates. This is distinct from a joint user, who is also allowed to spend as much money as she wants but is also personally liable for any debt that accumulates.
Question #2: What information do you need to add an authorized user for Chase?
Since there’s no personal liability for an authorized user, the bank doesn’t actually need to be able to identify the authorized user. Thus, all that’s required is a name. Any name. There’s no verification that the name you’re providing is for a real person or not.
Question #3: What’s the impact on the authorized user’s credit score?
In theory, being an authorized user on a credit card shouldn’t have an effect on that person’s credit score since he isn’t personally liable for the credit extended, but there are many anecdotes that contradict this. One of the most common scenarios of adding an authorized user is parents adding a child as an authorized user on a credit card so that the child starts developing a credit history. This is almost certainly a good idea if the parents are responsible users. But there are also stories of people being denied credit because parents are carrying a high balance or are behind on payments on a credit card for which the person is an authorized user.
Question #4: How does a credit card appear on an authorized user’s credit report if Chase doesn’t ask for a SSN or other identifying information?
The answer is that it doesn’t necessarily appear on the authorized user’s credit report. In general, it seems like if the name that you add as an authorized user is someone who shares your address, then Chase will be able to use that name/address combination to report information to the credit bureaus. But if the authorized user doesn’t share an address, then that credit card information can’t be connected to the authorized user, so nothing gets reported.
Question #5: Can an authorized user sign up for the same credit card and still get the sign-up bonus?
Yes! Being an authorized user on a credit card does not preclude you from getting that credit card yourself and receiving your own sign-up bonus.
Question #6: So what does this all mean?
I suggest that if you’re adding an authorized user solely to receive an additional bonus, you should think carefully about whom you add. In my experience, names aren’t actually verified, and you could cut the credit card up before it ever gets used (in my experience, the other credit card doesn’t even need to be activated to get the additional bonus).