PostTwiceDaily2 01/05/2011 (p.m.)

• Authorized-user accounts OK again (Page 2 of 2)

  • FICO 08 will score authorized user accounts
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    It could be a long wait before consumers can obtain their FICO 08 scores. Quinn says Fair Isaac is still revising the model with the three major credit reporting agencies, after which the company will focus on getting lenders to test and use FICO 08. He says it's too early to speculate on when consumers will get access to their new scores.

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    Pros and cons of authorized users
    If piggybackers were gaming the system, could people still do so by getting family members with great credit to add them as authorized users?

    Asked about legitimate authorized users inflating their FICO scores in this way, Quinn responded in an e-mail: "The innovation we are adding to the FICO 08 model will help control for the kind of score tampering you describe. The details of how it works must remain confidential."

    It remains to be seen how people with otherwise low scores will benefit from their authorized-user accounts after FICO 08 is in place.

    Authorized-user accounts aren't a cure-all, though, cautions Curtis Arnold, founder of CardRatings.com and author of "How You Can Profit from Credit Cards." He says credit scores look at many factors and there are bigger components to worry about.

    Authorized user accounts do impact your FICO scores, but they aren't a major factor in and of themselves. Here's a look at what influences your FICO scores.

    What makes up a FICO score?

    Being either an authorized user or a primary accountholder carries some risk. Authorized users could see their credit scores plummet if the primary cardholders default on the accounts. Primary cardholders are liable for any debt incurred by the authorized user, and high balances could damage their credit scores.

  • Being either an authorized user or a primary accountholder carries some risk. Authorized users could see their credit scores plummet if the primary cardholders default on the accounts. Primary cardholders are liable for any debt incurred by the authorized user, and high balances could damage their credit scores

• Authorized user 'piggybacking' for better credit score given reprieve by FICO

  • Fortunately, we were able to come up with technology that makes it much harder to game the system." As for what that technology entails, Fair Isaac was unwilling to elaborate.

• How being an authorized user can hurt your credit score

  • FICO came up with a formula to keep genuine authorized user accounts as part of the scoring process. Simply put, the account is legitimate as an authorized user when a person receives a credit card for their use on someone else's account. Just to note, the VantageScore has never considered authorized users as part of its credit scoring formula.

• Authorized Users: Any Credit Risk? Any Benefit?

  • Authorizing Users Raising Their Credit Score

    
    "I am planning to buy real estate soon. I am also attempting to boost my credit score by becoming an authorized user on a credit card my mother has had for 15 years (she's never missed a payment nor been late). She called the credit card company to add me as an authorized user, and explained the reason - to help me boost my credit score. They told my mom I can only boost my credit score if they add me as a co-owner on the account. They offered to send her a form to have me include my SS#, other information and my signature. I do not want to be a co-owner. Is this a ploy, or can credit card companies make their own rules regarding how a person can boost their credit score with their credit card?"
    
    I had trouble with this one also and sought help from Liz Pulliam Weston, who wrote Your Credit Score: How to Fix, Improve and Protect the 3-Digit Number that Shapes Your Financial Future (2004, Prentice Hall). Liz says that credit grantors do indeed make their own rules as to whether or not they report authorized users to the credit reporting agencies. Some do and some don't.
    
    The young lady who wrote me, looking for a free ride on her mother's good credit but unwilling to assume any credit responsibility, was frustrated because her mother's grantor was one that didn't report authorized users. Had she been more fortunate in her mother's choice of grantor, however, she might well have found the free ride she sought.

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