The new scoring model is being introduced between Sep'07 & Jan'08. It is not supposed to allow a credit card's authorized user(s) to use the credit history of the card in the scoring model.
This is ambiguous... Does that mean all current authorized users will not get the use of the history or only new authorized users after Sep'07 & Jan'08?
Citibank, for example, does not allow joint accounts. Thus on my card my wife will lose the credit history of the card and in turn on her account I will lose the value of a long standing account. Thus both of our credit scores will drop for no reason other than the new model. We neither sell or rent the use of our credit histories and don't even have our daughter as an authorized user but for a few "crooks" we will be damaged at a time when we will be selling our current house and seeking a mortgage on a new house.
Citibank has 120,000,000 accounts. Of those some 67% or over 80,000,000 are women who are listed as authorized users. For every credit card they are listed as an authorized user they will lose 30-50 credit scoring points. That means higher mortgage rates, higher car loan rates, higher credit card rates, etc. Is that fair for a few thousand dishonest consumers vs tens of millions of honest consumers. The new competing VantageScore developed and markets by the "Big-3" credit reporting companies uses a "block" method where the credit grantor decides whether they will include or exclude an authorized user. Would a credit grantor want to see two credit cards in a consumer's wallet or purse or all five credit cards where three are authorized users, that is, a complete picture? Credit grantors have told me they want to see a complete picture so why should FICO damage people by not giving them credit for their histories. Citibank and I think American Express do not allow joint accounts. Why can't FICO use a heuristic of the same last name and and address to include the authorized user or allow a switch where the credit grantor decides whether to include or exclude authorized users. Isn't this a violation of the Federal Fair Debt Reporting Act and doesn't FICO realize that when consumers are damaged they will run by the thousands to their lawyers and join a class-action that will cost FICO $15-20 million. I live in California a Community Property state where my wife is legaly responsible for all of our debts including credit cards where she is only and authorized user because the credit card company doesn't allow joint accounts. Why shouldn't she get credit for her good payment history? I don't blame the credit card company because with divorse rates at 50% its an operational nightmare to sort out whose going to be responsible for the account in a dissolution but I will blame FICO if my credit worthiness hasn't changed but our scores drop by 200 points as a family.
FICO has projected that the total number of consumers with at least one AU on their credit report is about 60 million (approximately 30% of those with credit reports). Further, 10 million (5%) will not see their score change when AUs cease to be calculated in FICO scoring. Of the remaining 50 million (25%), they could see a score decrease of as little as 1 point; not to mention those who will actually see a score increase because they were an AU on a negative account. I think a 30-50 point drop - per account - is quite exaggerated. There are millions of thick file credit reports that include one or two AUs - those accounts will be affected very marginally. Yes, there will be significant numbers who may see significant score drops, but throwing around numbers like 80 million consumers and 200-point drops is a bit hysterical.
Also, people tend to forget that Fair Isaac was the entity who did NOT want the AU scoring to be negated - it was the lenders who pushed for the change.
In addition, a score propped up by AUs does not automatically guarantee loan approvals - good lenders who conduct proper manual reviews will often factor out AUs when considering applications. The scoring change won't affect those lenders, it will just make their computations a bit easier. The real beneficiaries of the scoring change will be the lazy, high-volume lenders and CCCs, who based their approvals heavily (or completely) on bare scores, and who were vulnerable to the commercial piggybacking.