Authorized User Accounts

[CreditBob]

I have been doing my research on authorized user accounts. As part of this I have talked to creditors as well as the credit bureaus who all agree with what I am about to tell you about. Until the federal law changes these types of trade lines are to be reported. Yesterday morning a phone call, along with a letter, was sent to the House Finance Committee, as well as lawmakers in Washington, DC to request that authorized user accounts be excluded from the credit bureaus as well as removal of any existing accounts. In talking with creditors and the credit bureaus they agree with this. The only exception are businesses where the owner gets multiple credit cards for his employees.

So here is why this is being considered. An authorized user has not demonstrated the financial responsibility of making any payments on the account which is reflected off of the credit report. In addition they have not earned the fico credit score by which the credit reports which reflect payment history, balances, & types of credit used. The credit rating & score was just handed out. So for parents that do this for their child or spouses that do this for another spouse, you are actually hurting them, not helping them. The fico score belongs to the account holder and not to another individual that has piggybacked backed off of their report. It is not fair to the rest of us that have worked for and earned our scores.

Here is what you can do to improve your credit rating.

Get a cosigner.

Apply for your own account. If you need to there are creditors that will start you off with a secured account.

All that is being asked of anybody is to earn the right to have a good credit rating & fico score. You will need to work at it because it will not happen over night. And to get into the high 700's or even into the 800's there are certain things that you must accomplish.

[RobertEG]

Remember the days in the not too distant past when AUs were sold to total strangers on the internet?

[CreditBob]

Times are changing

[Anonymous]

Everyone needs help at one time or another and one of those people is ME, I've made mistakes in my past (credit wise) I'm 40 years old now and would love to buy a home of my own, I just started last year working on rebuilding my credit (opened 4 new accounts and as a result have a VERY short length of history) I really do not think I have 5 or 6 years to sit around and wait till my AAoA to build up to help bring my score up, so I asked my Father to add me as an AU on his 27.9 year old AMEX to help me out a bit (I know "length of history is only 15% of my score) but any help is worth it IMO.

It's not like 35% of your score or anything, I don't understand why you think it's such a bad thing to have someone in need of help get it this way. I respect your opinion and maybe if I had excellent credit and spent 25 years working to keep it that way I would feel the same way as you, but I'm in a different boat and I see it a different way.

My scores right now are TU 704 (FICO) and EQ 681 (FICO) (before showing the 27.9 year AMEX card on my TU and EX reports, I should see my reports update this upcoming week tho) are not great but are not that bad either, I have worked my butt off the last year to improve from the 583 I was at in May of 2010, using my cards responsibilly, paying them every month, keeping my util down near 10% etc....

All I wanted when I asked to be an AU on my Fathers AMEX was some help with my "length of history".

Just my humble opinion.

[Anonymous]

I like your comments about differing opinions but fail to understand the reasoning why being added as AU is okay or right for that matter. 

You stated you are 40 and you just started last year working to rebuild your credit.  What makes your needs more important or makes you more worthy of credit than those of us who have been building our credit over many years to get to where we are today?  The reality is that the score you have should be a reflection of the actual risk that you are to a lender.  Your father added you as an AU which will improve your score.  In doing this he is helping you to appear more worthy to a lender than your score without him would suggest.  My ask is this, rather than have your father add you as an AU to better your score, why not have him cosign on a loan for you to buy a home?  Essentially this boils down to him “having skin in the game” and not putting additional risk on the lender by “working the system”.

“length of history is only 15% of my score” – attempting to diminish the value of what is being done does not justify the action.  If the 15% is so minimal why bother doing it? 

“I have worked my butt off the last year to improve…” – you had to work your butt off for the last year because the previous 39 were not handled as well as they could have been.  This is not based on my own knowledge of your situation but rather your own comment of “I've made mistakes in my past (credit wise)”.  Your working your butt off, or for that matter any other body part, does not justify the actions or the loophole that makes them possible.

“I really do not think I have 5 or 6 years to sit around and wait till my AAoA to build up to help bring my score up” – this attitude shows why you likely deserve the very score you have today.  The immediate need for credit you are not due is exactly why I agree 100% with CreditBob.

I have no idea what your ability to repay a loan would be or your commitment to the same would be.  It really doesn’t make a difference to this discussion.  The reality is that a person who has spent one year being “good” after 39 of not being so “good” is likely not a good risk to take on.  Your score is reflective of that fact, plain and simple. 

Honestly, you seem to have done a great job raising your score over only a years’ time and I would say you have been rewarded for your efforts with a reflective score.  The additional score you will receive by being added as an AU will be a fake bump in score.

“Just my humble opinion.”