topic Re: Dilemma: secured card or AU ? in Rebuilding Your Credit

Dilemma: secured card or AU ?

Anonymous — Fri, 26 Feb 2010 00:55:04 GMT

Hi all,

New dilemma:

I'm fresh out of BK (12/09) and trying to get FICO score up. Current FICO is 582. I have no revolving accounts at this time. myFICO reports that I may benefit from opening a revolving credit account. From what I've gathered here I can either get added as an authorized user to a cardholder with a good credit history and FICO score or get my own card (most likely have to be secured at this time)

I'm not sure which would be the more prudent thing to do. When I enter new credit card into the Scorewatch simulator it drops my score even if the CL is $250. I don't know what to make of this. How accurate is the simulator?

I have no idea how my score would react to someone including me as an AU since this is not an option available on the simulator.(the person I have in mind has a FICO of 799 and no derogs on their 3 reports. The card is a BoA VISA signature world points that I have not as yet checked to see if they report AU's to the CRAs but I believe they do based on some info gleaned from another thread.

I could not find answers to this in either the BK or CC forums so I have posted here.

Appreciate any and all advice.

Re: Dilemma: secured card or AU ?

MarineVietVet — Fri, 26 Feb 2010 01:00:35 GMT

@Anonymous wrote:
Hi all,

New dilemma:
I'm fresh out of BK (12/09) and trying to get FICO score up. Current FICO is 582. I have no revolving accounts at this time. myFICO reports that I may benefit from opening a revolving credit account. From what I've gathered here I can either get added as an authorized user to a cardholder with a good credit history and FICO score or get my own card (most likely have to be secured at this time)

I'm not sure which would be the more prudent thing to do. When I enter new credit card into the Scorewatch simulator it drops my score even if the CL is $250. I don't know what to make of this. How accurate is the simulator?

I have no idea how my score would react to someone including me as an AU since this is not an option available on the simulator.(the person I have in mind has a FICO of 799 and no derogs on their 3 reports. The card is a BoA VISA signature world points that I have not as yet checked to see if they report AU's to the CRAs but I believe they do based on some info gleaned from another thread.

I could not find answers to this in either the BK or CC forums so I have posted here.

Appreciate any and all advice.

Being added as an AU can help you IF the account is older than any of yours, IF the payment history is long and clean, IF the utilization is very low, and IF it will report to the CRA's. Not all cards will do this. (BoA does report). You will inherit the entire history of this account. One caveat however; if this account starts to go south your credit will be affected as well. Keep that in mind.

I will let others advise about a possible card for your situation.

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work

Credit Scoring 101
Common Abbreviations
Frequently Requested Threads
Credit Problems Which Is Worse?
Whats In Your FICO Score

Re: Dilemma: secured card or AU ?

Jazzzy — Fri, 26 Feb 2010 01:10:11 GMT

I'd recommend that you try to do both. A secured card in your own name is a good idea. You don't want to just have an AU card.

An AU card will help you if it is older than your average age of accounts and if the card holder doesn't carry much of a balance. It needs to have a clean history. If you can be an AU on a really old card, it will give you even more of a boost.

I think the simulator can be somewhat hit and miss. Bottom line...they will both help you.

Re: Dilemma: secured card or AU ?

Anonymous — Fri, 26 Feb 2010 01:41:44 GMT

From what I know about the new FICO 08, there is No Piggybacking Allowed – This new version of FICO apparently has the ability to determine if an authorized user credit card account is an attempt to game the credit scoring system through piggybacking, which is the process whereby a consumer with poor credit would pay to be added to the credit card of someone with good credit as an authorized user. Fair Isaac will not disclose how they are able to tell the difference between a legitimate authorized user account belonging to, say, a husband and wife versus one that has been made it to a credit report through other means, such as piggybacking.

FICO 08 was originally going to completely ignore all authorized user accounts. This new logic seems to split the difference between ignoring all authorized user relationships and doing nothing to discourage the use of piggybacking services.

I would not be discorouge of the momentary drop in the FICO score by getting a secured card. You will also get hit by the "hard inquiry" when you apply. However, as the time passes the new TL will add far more in point and the inquiry effect will deminish within a year.

Re: Dilemma: secured card or AU ?

Anonymous — Sat, 27 Feb 2010 20:36:35 GMT

I checked the cards out. Both are BoA cards. One was opened 2/2000, has a CL of 17,000 and no balance, no lates and highest utilization was 10%. The other was opened 2006, has CL of 7000, no balance, no lates.

My EQ report lists AAoA as 12 years, so would the 10 year old card with perfect payment history be of benefit to me or does the fact that it is 2 years "younger" than my AAoA mitigate against it?

Also, with regard to Gordon's assertion about FICO 08 rules I've read some mixed opinions on these forums regarding whether or not the FICO 08 scoring algorithm has been implemented widely vs CRA's still using FICO 04 and I'm a little confused.

Does anyone know for sure ? Gordon ?

Thanks.

Re: Dilemma: secured card or AU ?

Anonymous — Sat, 27 Feb 2010 22:09:04 GMT

Stiffler wrote:
Also, with regard to Gordon's assertion about FICO 08 rules I've read some mixed opinions on these forums regarding whether or not the FICO 08 scoring algorithm has been implemented widely vs CRA's still using FICO 04 and I'm a little confused.

Does anyone know for sure ? Gordon ?

Thanks.

I think there is a misunderstanding about the CRA and the score (If I'm wrong here, someone please correct me)

We, are all looking at our FICO to see how our lender sees us, not the CRA.

FICO 08 will eventually be the industry standard credit score despite not being available yet from Equifax or Experian. We should see FICO 08 at Experian as soon as they start losing customers to TransUnion or Equifax. Eventually lenders are going to get sick and tired of getting caught in the middle of the Experian versus FICO arm wrestling match and move their business elsewhere when they find out that Experian is not offering the new gold standard credit scoring model.

The way I see it is that as long as FICO keeps improving what they refer to as their classic risk scores the lender will opt to adopt. In fact, a company called SubscriberWise had implemented FICO 08 not more than two weeks after it became available.

Whether you e graded by old or new FICO score you should probably continue to do what you're doing now. Continue to make all of your payments on time. Continue to work down your credit card balances as much as possible. Continue to apply for credit only when needed. If you can do all of these things then your FICO 08 score will be solid as a rock.