Remove myself as authorized user

[Anonymous]

I am an AU on one of my mom's cards, and it's practically maxed out.  I'm not sure if I should remove myself or not.  Removing myself as an AU will lower my ratio of credit used to credit available (helping my score), but I've read that I should not close any accounts.  Will removing myself as an AU be scored as if I closed an account?

Thanks!!

Chris

[RobertEG]

You are not closing the account,. for it is not your account to close.  It will just disappear from your CR, which has even more impact than closing your own account on avg age of accounts. 

So if your concern with being removed as an AU is losing its help in average age of accounts, yes it will.

But at the same time, you will pick up greatly improved %util.  You know that.  Do you expect that mom is going to pay the high account util down, and if not, what are the chances that she may not meet a payment for less than the minimum due?  That will result in a derog.

An AU account is a crap shoot that only you can assess.  I am not a big fan of being an AU because I want my credit score to reflect my credit history.

[Anonymous]

Thanks for the quick reply.  Regarding the AU account, it has a perfect payment history and it is one of the oldest accounts on my record.  I do not expect my mom to pay the balance down anytime soon, but late payments won't be a problem.  I'm applying for private student loans soon and the interest rate is set by the FICO score, as usual.  Currently I have a 709 and although I would love to get it above 720, I don't want it to go any lower.  I'm afraid of the effect of reducing the average age of my accounts.

Do you know if an account that carries a balance is worth more in the score calc than one that has a zero balance?  This assumes that both are the same age.  Most of my older accounts have a zero balance.

If I remove the AU, my %util will go from 56% to 47%.  My outstanding revolving balance will go from about 55k to 37k.

Thanks!

[RobertEG]

The answer to the account balance question is yes, it matters, but how much is not specific.

FICO has explained their calculation of scoring under % util as follows.

% util is 30% of overall FICO scoring. 

Approx half of this %util scoring is based on overall %util, and half on %util on indiv cards. 

As for indiv card utilization, they look at both % util on each card, and the number of cards showing balances as a percent of all open cards.  Having less than half (50%) of open cards reporting balances seems to be a cutoff, but no one knows for sure.  But number of cards reporting balances is a scoring factor.

All that can be offered in FICO is broad advice, for the exact FICO scoring algorithms are trade secrets that are not published.

[Anonymous]

OK.  Thank you very much.  I really appreciate the quick replies.

-Chris