AU accounts considered into FICO scoring?

[Scene]

I used the free trial offered by myfico to check for my real FICO score and I currently have a low 700 score (which is good!) but it factors the AU accounts that I am currently under.

I have lurked these forums for awhile now and I was under the assumption that AU accounts were NOT taken into consideration when calculating the FICO score. Is the "free" trial FICO score/ScoreWatch also a FAKO? Do I have to buy the "standard" score for $39.95 to get my true FICO score(s)?

[RobertEG]

When the creditor of the account agrees to add you as an authorized user on their client's card, and reports to a CRA, it appears, for FICO scoring purposes, the same as if it were your own personal account.  It clearly counts in all aspects of your credit scoring.

The only viewable distinction in your credit file is that the ECOA code of your AU account records you with a status of authorized user, and not with the status of responsible account holder.  That distinction is viewable upon a manual review of your credit report, and may cause some creditors to discount the value to them of your score as being artificially inflated. 

[llecs]

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@Scene wrote:

I used the free trial offered by myfico to check for my real FICO score and I currently have a low 700 score (which is good!) but it factors the AU accounts that I am currently under.

I have lurked these forums for awhile now and I was under the assumption that AU accounts were NOT taken into consideration when calculating the FICO score. Is the "free" trial FICO score/ScoreWatch also a FAKO? Do I have to buy the "standard" score for $39.95 to get my true FICO score(s)?

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All reporting AUs factor into FICO scoring equally as if the account were your own (utilization, mix of credit, lates, baddies, etc.). At one point, there was discussion that FICO's newer versions of FICO scores, FICO08 as we call it, would stop factoring in AUs to address the problems and concerns by lenders over piggybacking and artifically inflating your credit to look more favorable to lenders. While other scoring systems like VantageScore stopped scoring AUs, FICO decided against it due to concerns over a law called the ECOA and scores AUs in their newer versions.

SW offers and monitors your EQ FICO score. It's a FICO. Specifically, it is the same FICO version used by a vast majority of mortgage and other lenders (Beacon 5.0). The product offered by FICO Standard is another way to get your FICO scores via myFICO and offers a one-time purchase of your score and report (for EQ and/or TU). The EQ FICO is the same as SW (Beacon 5.0) and the TU version is the same as the one offered by myFICO's Quarterly Monitoring.

[Scene]

I see what you mean, it's factored in but not really seen as any tangible evidence of actually being a responsible consumer.

Do lenders have the ability to remove the AU accounts and refactor the "uninflated" FICO score, or do they just take guesses at how much lower (higher) it will be?

[AndySoCal]

How much of impact the AU account will also depends on which model of the FICO score is being used.  The latest model FICO  has changed who an AU account affects the socre. The account is included in the score model.

[haulingthescoreup]

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@AndySoCal wrote:

How much of impact the AU account will also depends on which model of the FICO score is being used.  The latest model FICO  has changed who an AU account affects the socre. The account is included in the score model.

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Which "latest"? AU accounts are included in FICO 08 scoring, although there's supposed to be some sort of effort made to weed out the commercial piggybackers.

[AndySoCal]

FICO 08 was the model I was referring to.

[haulingthescoreup]

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@AndySoCal wrote:

FICO 08 was the model I was referring to.

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OK, then I'm confused by what you were saying (sorry, it's late.) Can you please clarify? (I re-quoted you below.)

My understanding is that AU accounts are still factored into the scores in the three 08 scores. This was due to the potential for violation of the Equal Credit Opportunity Act, where spouses (usually wives) could see their credit scores drop if many or all or their reporting open revolving accounts were AU and ignored for scoring.

In other words, to avoid lawsuits, FICO 08 was modified to continue scoring AU accounts, although they did say something vague about attempting to verify that there was some sort of legitimate relationship between account holder and AU. This was in an attempt to weed out commercial piggy-backing.

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@AndySoCal wrote:

How much of impact the AU account will also depends on which model of the FICO score is being used.  The latest model FICO  has changed who an AU account affects the socre. The account is included in the score model.

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[RobertEG]

FICO scores are one thing a current or potential creditor can use in their credit decisions. It is not the end-all.

For some decisions, usually for lower-risk extensions of credit, they wont invest a lot of time and money in credit determinations, and may choose to rely primarily, or even exclusively, on your payment risk analysis, as coded by your FICO score, as their lending determination criteria.

However, if concerns are raised, or the principal being extended rises, so may their analysis.  FICO score, while still important in assessing your future risk of timely payment, may not be enought to satisfy their concerns.  They may turn to other factors specifically not evaluated by FICO, such as income, debt not reported to a CRA, assets, etc. The normal mortgage application process is a good example.  Payment of old debt, which is not scored by FICO per se, may be a prerequisite for any mortgage loan approval.

They may do a manual review of your CR to evaluate things not clearly evident from your FICO score alone, such as the status and amount of reported and still unpaid debt.  FICO simply does not score either the payment or nonpayment of debt, but rather the derogs and delinquencies that occured along the way as an indication of your future risk analysis of paying timely, when due. FICO does not assess your history of paying ultimately.  A big difference.

They also know that your FICO score can be inflated by the inclusion of favorable credit scoring factors that were not based on the credit history of the actual consumer.  By that, I mean AU accounts.  They understand credit scoring, and may choose to discount the three-digit FICO score if not based on the individual's own proven track record.

Credit approval does not direclty equate to FICO score level in many instances. 

[AndySoCal]

Here is a link to the FICO product Fact sheet for theFICO 08 score.

http://www.fico.com/en/Products/Scoring/Pages/FICO-score.aspx

I agree AU accounts are still considered in the score. What I was trying to say the amount the score will change because ot the addition of an AU account has changed with the FICO 08 score.  The second page of the product fact sheet makes that point clear.