Should I remove my authorized user account?

[JuleeM]

I could use some advice. I'm going to be applying for a mortgage in a couple months and I'm trying to get my score up as much as possible before then but also still save for the down payment. I have been working on this for about a year and have managed to go from a 673 to 723 (Equifax FICO). Most of this has been done by paying off some CC balances.

Currently I have a utilization percentage of about 42% (I was over 70% before). This % includes a credit card of my mother's for which I'm an authorized user so my score is calculating this card. Her card is at a 45% utilization ($14K limit) but has an excellent payment record. It's also the oldest card on my report at 22 years old (1991). If they only account for open accounts then my oldest card is 2006. If they account for closed cards or loans then my oldest is 1990.

Not considering my mom's card I have a 35% utilization. I may be able to get that down a little more to under 30%. I have been putting more money away for the down payment instead since with my mom's card paying off another $1,000 wouldn't change the percentage enough.

I'm considering having myself taken off my mom's account in hopes to raise my score but I'm afraid of it having the opposite effect. Can anyone offer me some advice? Also does anyone know about how long it would take to see a change in my score if I have myself removed? Thanks so much!

[guiness56]

Both open and closed OC accounts factor into your AAoA.  It looks like without that card your AAoA would still be older than with it if you have accounts dating back to 1990.

[JuleeM]

Can anyone else offer advice?

[llecs]

Pay down CC balances more, including the AU. You're still getting dinged fairly heavily at 42%.

Ditto to keeping the AU. Assuming you don't have other accounts from the early 1990s, I bet the age helps you more than the util hurts. 

[JuleeM]

My mom pays the account I'm an authorized user on. It's her account that I have been on forever. I don't use it. She is paying it down slowly. It has a high limit so it will not be below 40% anytime soon. That is why I was asking if it would be smart to remove it because I could potentially get my accounts to below 30% but I'm not sure that would help that much.

[ScoreBooster]

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@JuleeM wrote:

Can anyone else offer advice?

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Well, if you are a bit short on cash and want to bring your utilization down, you can certainly use some tricks:

Instead of paying cash for groceries and/or utilities, use that money to pay down the CCs prior to their closing- or reporting-date first and after that, use the cards to pay for your bills and expenses. This could also save you some interest if you use your money to pay off your CCs prior to the billing cycle closing date. After that, you can use them again.

Usually, the system even punishes you by reporting the highest balances you usually have - the billing cycle closing date. By doing what I suggested, you can outsmart it by using it's own weapons.

[IOBA]

One more suggestion - you know what the score is now, with mom's card in the mix.   Remove the card and see what the score is after.   If it's lower, then consider adding it back.

Something else that needs to be said/kept in mind.  If you have a high DTI ration (35-42%) NOT counting a mortgage payment, you might find it difficult to get approved for a mortgage at all.

Have you been talking to a lender?

[JuleeM]

IOBA, my back end DTI including my max desired house payment of $1,600 is 34% including the payment my mom's card assuming they will calculate that in even if I don't pay that. If I remove my mom's card I'm at 29% DTI.

Front end ratio is 26%.

Also, will they allow me to be removed and then added back on? I guess I didn't think I could do that. Do you know how long it usually takes them to report so I can see the effect? The AU account is a Citicard.

[RobertEG]

When you apply for higher principal credit, as a mortgage, the app process is not confined to credit score.

They will most likely do a manual review of your CR.

With presence of an AU account in your report, the first thing it says to a reviewer is that your score is not based on your own personal credit risk assessment.

The reviewer has no way to "back out" the impact of the AU account in your scoring, and thus it might put in question the value of your score itself.  Mortgage lendors will sometimes even request that you remove yourself from AU status so that they can assess your own personal risk score.

Considering only scoring impact, if her % util remains higher than yours, it is most likely not helping in that category.

As for payment history, absence of derogs means it is not hurting in that category.  if your file is clear of major derogs on your own accounts, I dont see any substantial gain in payment history scoring.

The benefit would seem to be coming from inclusion of that one account in calculation of your average age of accounts.

I would do a simple calculation with and without that AU, and look at the difference.

If not substantial, or if you still have a solid AAoA, then I would consider removing the AU for more reasons than just your three-digit FICO score.

[JuleeM]

Thanks Robert. Stupid question. How do I calculate the AAOA? Is it just the number of months each have been active and then do an average?