Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007
Re: Authorized User Accounts
[ Edited ]

CreditBob wrote:

I also just listened to a segment online a few days ago & fico will not include authorized users by this September. .................Just look at all the mortgage loans & other types of credit that people have gotten in 2008 or before that should never have gotten them in the first place. Let me ask you this questions. If your son or daughter has nothing but authorized user accounts on their credit profile with Equifax, Experian, & Transunion, then how is the lender supposed to determine what kind of credit risk they may be????    It also depends on who you talk to and what their point of view is on this. I have talked to different creditors, executives in the credit bureaus, & some of our law makers in Washington, DC to which this has gotten their attention. Some of them have expressed the same concern as if you were to compare it to the credit crisis in 2008 where many have gotten credit that never should have in the first place. On a last note it is only a certain time before more changes are made. And one of them includes a compete ban of authorized user accounts being on any credit report with the three major bureaus.


That info could be a little outdated, unless a new round of discussions are at play. FICO had announced in the late summer/early fall of 2008 that they would exclude AUs from FICO scoring. This was in response to the credit crunch and because many lenders were seeing high rates of default from those who engaged in piggybacking. Lenders have input of course on FICO and it was that input that led to the announcement. This was to occur on the latest version of FICO (FICO08 or FICO8 depending on what you call it). However, after a review of the legalities of it, FICO backed off and reverse their decision and re-included AUs on the newest FICO versions. The Equal Credit Opportunity Act was interpreted to prohibit the exclusion of AUs and it was that law that led to the reversal.

 

IMO, AUs should be excluded. It should be excluded for the piggybacking issue. Also if you stroll in Mortgage Loans board, some have posted their lender would routinely exclude AUs from consideration in the mortgage process, and yet others would ask the borrower-to-be to remove themselves from the AU as a condition for approval.