topic Authorized User Accounts in General Credit Topics

Authorized User Accounts

CreditBob — Fri, 10 Aug 2012 17:57:02 GMT

I wanted to also send you this email in regards to the recent changes on authorized user accounts that are being reported to the credit bureaus.

All authorized user accounts that are on a individual's credit report will not have the age account history in relation to the original accounts holder's history. Let's say your dad has added you as an authorized user & has had the account opened for twenty years from 08/10/1992. The new change will only report the authorized user's open date from the date that it was added on. So for example if the authorized user account was added on 01/31/2012 then as of 08/10/2012 the account is only 7 months old. As a result a lot of authorized user accounts will cause their score to drop

Re: Authorized User Accounts

pizzadude — Fri, 10 Aug 2012 17:27:32 GMT

What creditor sent this information to you ? In almost all cases, an AU will inherit the entire account history ( good or bad ) from the point that the card was first opened.

Re: Authorized User Accounts

CreditBob — Fri, 10 Aug 2012 17:56:47 GMT

I was told by someone that is an authorized user as well as a person that is working with a mortgage company. So now the new rules are as follows. it is when the authorized user account was added not the entire age history of the original card holder.

Re: Authorized User Accounts

pizzadude — Fri, 10 Aug 2012 18:37:39 GMT

It is up to each creditor to decide how to report AU accounts ~ but in general most AU accounts will reflect the entire history of the account. FICO® scoring also continues to score AU accounts the same as individual accounts.

Re: Authorized User Accounts

MarineVietVet — Fri, 10 Aug 2012 20:45:55 GMT

pizzadude wrote:
It is up to each creditor to decide how to report AU accounts ~ but in general most AU accounts will reflect the entire history of the account. FICO® scoring also continues to score AU accounts the same as individual accounts.

Ditto.

Just because one creditor might decide to report AU's form the date the AU was added doesn't mean every other creditor will do the same thing. This is definitely a YMMV situation.

Re: Authorized User Accounts

FlyingBoat — Mon, 03 Dec 2012 07:40:27 GMT

I just looked at the CrediKarma report for my kids who I added as authorized users. Really dissapointed now to see all the new accounts as being the date they received their AU card instead of the date I openned the account. It dropped their scores significantly. They now have an "F" rating on age of account because I added them to several accounts. It used to not be this way. I am going to need to drop their added cards. I hope it didn't mess them up to bad.

Re: Authorized User Accounts

Shogun — Mon, 03 Dec 2012 13:37:42 GMT

Don't go by what CK posts. They don't factor the dates the same as FICO does, also they don't factor in the AAoA of closed accounts.

Re: Authorized User Accounts

CreditBob — Mon, 03 Dec 2012 14:47:30 GMT

Why don't you cosign for them or have them start by opening am account at a credit union. My credit union will with a $ 100 limit. Or have them get a secured account. These are great for teenagers that have just turned 18 years old. The reason the changes were made is because the score is there to measure an individual's credit risk or credit worthiness. A score that is just given to someone as a result of piggybacking or borrowing a trade line from another person has no way of doing that. There are some lenders that will not use an authorized user account for those reasons & Chase Bank is one of them. I also just listened to a segment online a few days ago & fico will not include authorized users by this September. Just look at all the mortgage loans & other types of credit that people have gotten in 2008 or before that should never have gotten them in the first place. Let me ask you this questions. If your son or daughter has nothing but authorized user accounts on their credit profile with Equifax, Experian, & Transunion, then how is the lender supposed to determine what kind of credit risk they may be???? It also depends on who you talk to and what their point of view is on this. I have talked to different creditors, executives in the credit bureaus, & some of our law makers in Washington, DC to which this has gotten their attention. Some of them have expressed the same concern as if you were to compare it to the credit crisis in 2008 where many have gotten credit that never should have in the first place. On a last note it is only a certain time before more changes are made. And one of them includes a compete ban of authorized user accounts being on any credit report with the three major bureaus.

Re: Authorized User Accounts

llecs — Mon, 03 Dec 2012 15:46:29 GMT

CreditBob wrote:
I also just listened to a segment online a few days ago & fico will not include authorized users by this September. .................Just look at all the mortgage loans & other types of credit that people have gotten in 2008 or before that should never have gotten them in the first place. Let me ask you this questions. If your son or daughter has nothing but authorized user accounts on their credit profile with Equifax, Experian, & Transunion, then how is the lender supposed to determine what kind of credit risk they may be???? It also depends on who you talk to and what their point of view is on this. I have talked to different creditors, executives in the credit bureaus, & some of our law makers in Washington, DC to which this has gotten their attention. Some of them have expressed the same concern as if you were to compare it to the credit crisis in 2008 where many have gotten credit that never should have in the first place. On a last note it is only a certain time before more changes are made. And one of them includes a compete ban of authorized user accounts being on any credit report with the three major bureaus.

That info could be a little outdated, unless a new round of discussions are at play. FICO had announced in the late summer/early fall of 2008 that they would exclude AUs from FICO scoring. This was in response to the credit crunch and because many lenders were seeing high rates of default from those who engaged in piggybacking. Lenders have input of course on FICO and it was that input that led to the announcement. This was to occur on the latest version of FICO (FICO08 or FICO8 depending on what you call it). However, after a review of the legalities of it, FICO backed off and reverse their decision and re-included AUs on the newest FICO versions. The Equal Credit Opportunity Act was interpreted to prohibit the exclusion of AUs and it was that law that led to the reversal.

IMO, AUs should be excluded. It should be excluded for the piggybacking issue. Also if you stroll in Mortgage Loans board, some have posted their lender would routinely exclude AUs from consideration in the mortgage process, and yet others would ask the borrower-to-be to remove themselves from the AU as a condition for approval.

Re: Authorized User Accounts

CreditBob — Mon, 03 Dec 2012 16:08:33 GMT

This has nothing to do with this topic being brought up in 2008. The truth in lending & other appropriate changes to the authorized users is being considered by the law makers. I do not believe that they have not included the folks at Fico or Myfico because it related to the credit bureaus. In other words Fair Isaac would not have to do a thing because once the law is changed & no more authorized users are on a indivdual's credit profile, then the fico score would only go off of what was being reported. These are new discussions as we are speaking now.

Re: Authorized User Accounts

Croselx — Mon, 03 Dec 2012 16:44:15 GMT

I would not mind if the age of the account started on the day that the AU was added. This is the only category that doesn't show the if the AU is credit worthy, the advantage the AU would have over getting his/her own credit is no HP and guaranteed approval (as long as the card reports AUs). IMO, being an AU is similar to being a joint account holder. You both take care of the account and won't want high Util. or a missed payment to affect you, having the entire age of the account just as if it were yours all is not an accurate measure of being credit worthy (of course, I will use it if it is there, but won't miss it).

Re: Authorized User Accounts

my-own-fico — Sat, 15 Dec 2012 04:46:32 GMT

llecs wrote:

However, after a review of the legalities of it, FICO backed off and reverse their decision and re-included AUs on the newest FICO versions. The Equal Credit Opportunity Act was interpreted to prohibit the exclusion of AUs and it was that law that led to the reversal.

Authorized User Accounts (everyday accounts). Wasn't it about spouses? FICO "later reversed their decision after consumer advocates observed that FICO 08 could unfairly impact women and/or stay-at-home spouses, and lenders’ concerns that using the new model would impede their compliance under Regulation B—which requires lenders to consider credit histories on accounts shared by spouses when assessing a married person’s credit risk." FICO had actually found a way to separate such valid AUs from the rest, so I don't know why they felt compelled to toss the whole deal; the article touches on that too. I hope that lawmakers at any potential time would acknowledge the distinction.

Re: Authorized User Accounts

llecs — Mon, 03 Dec 2012 19:14:19 GMT

Yes, I too think it was over spouses. Many would have been impacted due to the change.