08-10-2012 11:33 AM
Authorized User Accounts
I would like to see all authorized user accounts permanently banned & being reported to all of the credit bureaus. The credit report rating & the fico credit scoring system is set up so that it accurately measures credit risk of an individual. In addition it sets the internet that the consumer will get on credit cards, auto loans, personal loans, & mortgage loans. Individuals that have authorized user accounts on their credit report are getting a high score when they have made no payments. It is not fair to the rest of us that make our payments on time. I was reading that some states consider this to be financial fraud because they are getting a lower rate they through their actions of their own account history are getting these high scores & credit ratings. Creditors have no way to measure what kind of credit risk these types of consumers are. For this reason Utah Community Credit Union will not use these types of accounts. But there are lenders that will. The truth in lending policy or act (federal law) needs to be changed. There are consumers that are getting very low rates & loans that should never have gotten them in the first place. I am comparing this to the credit & mortgage crisis back in 2008 where people have gotten credit or mortgages that should have never been approved int he first place. Please pass a bill that prohibits any authorized user account to be on any credit report with all the credit reporting agencies. Second, I would like to see a federal law so that a loan through a finance company is treated the same way as if you went to a bank or credit union. here is what is going on. The credit bureaus are causing your fico credit score to be at least 50 points less on the fico credit score because you are using a finance company. Now I am on my second loan with Springleaf Financial Services & I have never been late. In fact all my accounts, open & closed, are paid as agreed & on time. How on earth a I a higher credit risk. It's bad enough when they charge you 25% or higher. I would also like a law that allows consumers to have good accounts removed from any credit report if the information is harming the individual's credit rating or credit score, such as a finance company being reported
08-10-2012 12:00 PM
Finance companies would have a smaller pool of people to take advantage of. This would cause more competition. More competition means lower rates. Lower rates mean less ROI, which leads to decreased investing. Decreased investing means less money to loan.
It's highly politicized, too. We're being sold on the idea that access to credit is a basic inalienable right SAPs would be denied without the ability to become an AU.
08-10-2012 12:15 PM
I'd suggest that you forward your concerns to your represenatives & senators as they have the standing to pass such a law.
While it is true that FICO and even some other scoring models include AU accounts, you can rest assured that almost all creditors are sophisticated enough to parse out individual and AU accounts on credit reports, and to make lending decisions based on that, rather than just on a score.
Also, you are vastly overstating the FICO score impact of a "consumer finance" accounts ~ the damage caused by this would be nowhere near 50 points.
08-10-2012 04:15 PM
Regarding authorized user accounts I would disagree with banning them completely. There are some legitimate uses for an authorized user account. I think FICO in the latest FICO score model has taken prudent steps in revising how the score model calculates the score when this type account is present..
08-10-2012 07:23 PM
08-10-2012 08:59 PM
I thought having a mixed of different types of credit was a good thing versus say 20 millions credit cards and maybe a car loan and or mortgage? So if you have a few loans whether it be auto, mortgage, or personal could end up hurting you?
08-10-2012 09:28 PM - edited 08-10-2012 09:30 PM
OP, AUs can't be omitted because of the Equal Credit Opportunity Act. Even if so, it'll be unfair to families out there. There are quite a number of spouses who forego applying for credit and rely on the spouse for income, credit worthiness, etc. Eliminating AUs would be detrimental to that segment, especially when it comes time to app for a mortgage, car, etc.
ETA...Springleaf is considered a very high risk loan and high rates are the norm. It's also a consumer finance loan and viewed on par as a payday loan.
08-10-2012 10:14 PM
08-10-2012 10:24 PM
How is it be unfair considering that segment chose itself?
I'm for AUs but not the idea of limiting its use to protect one group.
08-11-2012 01:39 AM
My wife does not work. I am the income source for our family of three. Except for one account, if an account allows the addition of an AU, we have added each other as AU's.
In a few years, I will add my stepson as an AU on at least one of our accounts - IF - he is responsible and behaves. He's only 8 now....if he had a FICO score based on his attitude and behavior right now, he wouldn't even qualify for a First Premier rebuilder card with 35% interest....
If not for the benefits of AU's on accounts:
Most importantly to me, the ability to add someone as an AU on our accounts has provided me with more options to take care of my family if a financial emergency occurs.It provides each of us with options if something should happen to the other. I sleep a little better at night knowing we have a significant amount of available credit, in addition to our savings and insurance. These options would not exist without AU's and the credit reporting that comes with it.
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.