Parents' large credit line negatively affecting credit score??

[Anonymous]

Hi everyone,

I am 25 years old, and opened my first credit card (a Mastercard) about a year ago. Before that I only used debit cards, and occasionally an American Express that was linked to my parents' account. I have no other debts. My credit score is good (722) but Credit Karma gave me an F on total accounts, since I only have 3 (my parents' amex shows up twice for some reason, more on that later).

I recently applied for the Amazon.com Visa, and got rejected for the reason of "current obligations too high relative to income." I make $40k a year, and my only personal credit card has a $750 limit. Meanwhile, the credit card that's linked to my parents' account has tens of thousands of dollars on it (they make a lot of money, and can afford to pay it off in full each month). On Credit Karma, they count these thousands of dollars among my "Total Credit Card Balances." But the site still lists my credit card limit as $750, and my credit card utilization rate only reflects the percentage of that $750 credit line I'm using.

A few questions:

1. Why does the American Express come up twice? Is this some sort of error? The balance is the exact same on each card, and as far as I know I've only ever had that single account with them.

2. Is the Amex linked to my parents' account actually making my credit situation worse?? I rarely use that card in the first place. Meanwhile, I pay my Mastercard in full every month.

3. Assuming that it's my parents' account that's messing up my credit options ... how do I fix this? Do I need to get them to cancel my card on that account in order to be able to get a credit line that's more than 2% of my income?

Thanks in advance for any advice.

[llecs]

I don't know why it would report twice. Could one have been a lost/stolen CC? Is it a reporting issue with TU or CreditKarma (CK uses TU)? Does it report the same on EX and/or Eq? Which Amex is it?

CreditKarma isn't related to anything close to FICO scoring. Ignore their scores and advice. If this is an Amex like a Green, Gold, Platinum, etc., and per FICO scoring, EX and EQ will ignore the balance and CL for util purposes and a high balance by your folks isn't hurting your score. The TU FICO on here does calculate the balance in relation to the reported high balance and that can negatively impact your FICO if your util is high. Not many lenders use this FICO version though and newer FICO versions ignore the util.  If this Amex is like a revolving like their Delta, Blue Cash, etc., then the balance and CL are reporting and factor into util.

Outside of FICO scoring, lenders will still look at the balance and factor tthat into your ability to replay the Amex, even though it isn't yours. YMMV on the lender. If it's a charge card like the Green, etc., many lenders will ignore the balance. My mortgage lender for example ignored all of my charge cards knowing I have to pay in full monthly anyway. If it's a revolving, then they'll factor in the min. payment into DTI.

If you want off, cancel via disputing with the CRAs as "not mine". It'll disappear.

ETA...I'll add that removing yourself as an AU can have a negative score impact due to the loss in AAoA and length of history. Something to consider. 

[Anonymous]

Hi llecs, thanks for your response. Do you have any thoughts on why I was denied my recent credit card application? Is a $750 credit line on a $40,000 salary really considered too high of an obligation?

[llecs]

The CC company will give you a letter outlining the denial reasons. I'd work on that. It could likely be that they are factoring in the Amex. If they have a charge card, they have to pay it off to $0 once monthly. You can always ask them to time the payments with the statement to get it to report lower or even at $0, and then app once you are certain it reports lower.

If the 722 came from CreditKarma know that it isn't a FICO. Your FICO could be higher or lower. Your FICO report will show the top 0-4 things that hurt your score the most and again for those that help your score the most. Lenders base their decisions around those rankings. It's worth comparing any lender denial with those rankings.

Finally, lenders sometimes just toss whatever out if they are wanting to deny credit. There are times where my FICO scores were in the 700s with very low util and would still get denied. Not long ago Penfed denied me with an EQ FICO in the mid 700s with util lower than 10%. They denied me because util was too high and that my accounts were too new (newest was a yr old). This approval stuff isn't exact science. You can always call the credit issuer and ask them to go over the report with you (I'm not sure who they pulled) and that way you can get a feel of what they want.