Authorized User Question

[Anonymous]

I read a much older post  stating that being an AU DOES AFFECT a persons credit score. I also recently read an article stating that being an AU no longer affects a persons credit. I am a little confused which is correct. Any idea? My fiance and I want to share a CC in hopes of increasing my credit score. Thank you!

[Crashem]

I think the mixup comes from the fact that FICO stopped making authorized user credit data from having an effect.  They then backtracked and make it count again.  I am not sure if people are using scoring models from then, if it still doesn't help.  But I know current scoring models take it into account.

My suggestion is to go ahead and try it.  If it helps, great.  If not, take yourself off.

[Anonymous]

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@Crashem wrote:

I think the mixup comes from the fact that FICO stopped making authorized user credit data from having an effect.  They then backtracked and make it count again.  I am not sure if people are using scoring models from then, if it still doesn't help.  But I know current scoring models take it into account.

My suggestion is to go ahead and try it.  If it helps, great.  If not, take yourself off.

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I believe this is correct, also in addition to this, if your become an AU on a NON Family members account, FICO will not take into consideration that account and you will see no real benefit from it, but if you add yourself to a Family members CC account as an AU, you will see a benefit and most likely a score increase, but the account must be older than any of your current accounts to see a real benefit to your AAoA's, however, even if the card is not older than any of your accounts it will help your util, possibly helping with your scores if your util is a bit high now.

Remember you will inherit the entire history of that account, so if there are any negatives on that account, it will hurt you more than it will help, so do your homework and make sure, this is the right choice for you.

Best of Luck.

[llecs]

FICO considered it at one point because lenders were seeing defaults from AUs. People were piggybacking by buying tradelines to artificially increase their scores. FICO considered ending the scoring of it but though the Equal Credit Opportunity Act might prevent them from doing so. All FICO models score AUs, whether in relation or not. There are some FAKOs that ignore AUs, though.

[Anonymous]

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@llecs wrote:

FICO considered it at one point because lenders were seeing defaults from AUs. People were piggybacking by buying tradelines to artificially increase their scores. FICO considered ending the scoring of it but though the Equal Credit Opportunity Act might prevent them from doing so. All FICO models score AUs, whether in relation or not. There are some FAKOs that ignore AUs, though.

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I thought that FICO did go though with the AU piggybacking that if you were added to an account that was not a relative, FICO would not take that account into consideration for scoring purposes? I thought the only way FICO would take into account an AU account for scoring purposes was if the AU account a person was added to was a relatives account with the same last name?

I am not questioning you IIecs, because I know with 100% certainty that you have far more knowledge than I do, I am just a bit surprised by this, because I could have sworn I read that this did take affect by FICO.

I must have read something else and confused it with this situation, to the OP, I am sorry that I gave you incorrect information, but what makes myFICO so great is, if someone gives incorrect information, one of our FICO experts will chime in and give a correct answer.

Thank you IIecs for correcting my reply, and giving the OP the correct answer, I appreciate it, and now the OP will have accurate advice to follow.

[llecs]

At one point I thought that too. I even posted that several times in these forums. My source was a news article interviewing someone from FICO that said they'd differentiate between AUs and family-related AUs and separate the two. But after posting that for a while, I learned from Barry and another source on FICO's website that said differently. They said that all AUs are included.

I didn't know how they would implement the differentiating of AUs and it didn't seem possible to do. When you think about it, some spouses, when married, keep their maiden name. Or some spouses don't live with the other due to job assignments, military, and so on. It would mean that FICO would have to score addresses if an AU is present and didn't see how that would work. BTW, that's only for spouses. What about parent-child? Sometimes you can have different last names and different addresses. And how far would it go? Uncle-nephew? Grandparent-grandchild? BF-GF? I couldn't see how they'd draw the line with [excluding] of AUs.

[fast_times]

It would probably be much easier for the CRAs to exclude based on the number of AUs somone has under their accounts, and/or the frequency that thay change.  If somone has 5+ AUs under every good-standing account they have and they are different names every few months, they are probably selling that service to others.  That's how I would have fixed the AU abouse problem.

[RobertEG]

In my opinion, it is not only an AU abuse problem.  It is the inherent contradiction in using a FICO score to evaluate a consumer's personal risk of default based on the track record of another.

Being an AU, even though included in your scoring, can still affect your credit.  Any creditor deciding to take the logical step of discounting any contribution of the credit history of another when using a consumer's FICO score as part of their decision-making simply cannot do that.  They cant recalculate a score excluding the AU information.

In such cases, it might have the effect of making your entire FICO score questionable in any of their decision-making.

That, to me, is an effect on credit.