Not Building Credit via Authorized User?

[Rockysocks]

A coworker at the CU I work for told me the other day that there have been recent changes to laws or whatnot that resulted in people no longer building credit by being an authorized user on someone else's credit card. She said it doesn't get reported to credit bureaus anymore, and she said it wasn't just my company, but every lender now. Is she incorrect, or am I just naive? Tried searching here but only found older threads.

[JoeRockhead]

Your colleague is incorrect unless they're speaking of particular rules within your CU. 

Some time in the not too distant past, FICO stopped factoring AU accounts into at least their FICO 8 scores altogether. There's been mixed reports on them still factoring into older scoring models like the older mortgage scores, and even reports that they can still use them in newer scoring models if deemed to be from a spouse, but I've been unable to get a straight answer on this even after speaking to CSRs from MyFico.

I have two AU accounts and they are reported every month to all CRAs having little, if any effect on my FICO scores. AU accounts are still fully used and credited towards Vantage scores.

[sznthescore]

Yes & No. Depends on the lender and/or what exactly you're applying for with only AU accounts reporting and nothing primary.

Laws.... ummm not so much. If it were the case the option to add AU's would be gone from all lenders, yet it's still an option from many of the big players. Ex. Amex, Capital One, NFCU, etc. just to name a few.

[coldfusion]

It is not a law.

There was an underground industry developing at one point where individuals that had aged but barely used cards with large credit limits would for a fee name you as an authorized user, boosting the authorized users' average age of accounts and lowering their utilization.   Issuers saw that as a big no-no and If they got caught someone doing that a common outcome was the account being closed.

That helped lead to some later scoring models and some issuers internal proprietary models discounting accounts naming applicants as authorized users as part of their decision making processes.

[K-in-Boston]

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@JoeRockhead wrote:

Your colleague is incorrect unless they're speaking of particular rules within your CU. 

Some time in the not too distant past, FICO stopped factoring AU accounts into at least their FICO 8 scores altogether. There's been mixed reports on them still factoring into older scoring models like the older mortgage scores, and even reports that they can still use them in newer scoring models if deemed to be from a spouse, but I've been unable to get a straight answer on this even after speaking to CSRs from MyFico.

I have two AU accounts and they are reported every month to all CRAs having little, if any effect on my FICO scores. AU accounts are still fully used and credited towards Vantage scores.

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Authorized User accounts are absolutely factored into FICO scoring algorithms provided they do not trigger anti-abuse mechanisms.  (Same household is generally sufficient to prevent this.)  There's even an all-zero penalty if none of your AU revolving accounts are reporting a balance, independent of the all-zero penalty on Primary revolving accounts.

[JoeRockhead]

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@K-in-Boston wrote:

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@JoeRockhead wrote:

Your colleague is incorrect unless they're speaking of particular rules within your CU. 

Some time in the not too distant past, FICO stopped factoring AU accounts into at least their FICO 8 scores altogether. There's been mixed reports on them still factoring into older scoring models like the older mortgage scores, and even reports that they can still use them in newer scoring models if deemed to be from a spouse, but I've been unable to get a straight answer on this even after speaking to CSRs from MyFico.

I have two AU accounts and they are reported every month to all CRAs having little, if any effect on my FICO scores. AU accounts are still fully used and credited towards Vantage scores.

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Authorized User accounts are absolutely factored into FICO scoring algorithms provided they do not trigger anti-abuse mechanisms.  (Same household is generally sufficient to prevent this.)  There's even an all-zero penalty if none of your AU revolving accounts are reporting a balance, independent of the all-zero penalty on Primary revolving accounts.

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These are the facts for me personally. I've kept detailed records (daily) on my scores and CR. On my FICO 8 score, because to be honest I'm just not ambitious enough to track all the scores and effects on the multiple scoring models. For the last 12 months, 2 of my AU accounts (belonging to my DW, same address, different last names) the account ages are not factored, credited, or had any effect to my scores, at all. The CLs of those two accounts are not factored/credited into my overall available credit, but here's where it gets interesting.... They are factoring the balances (consistanty 5 to 10% balances) of those accounts into my overall personal UTI. However, it has had no effect on my scores one way or another, whether those two accounts were reported a 5% balance, or a 25% balance, it has had 0 effect on my F8 score. Now, I haven't had a 0 balance report on either, so I can't offer any DPs on that. I also haven't had any balance report over 25% so if Im getting anything out of it, it's so minute that it doesn't register a point either way. I know, the UTI factoring that I've experienced just doesn't make sense, but, every time one of her accounts report and I do the math it's the same, every single time. UTI is factored against only my personal available credit and no change in my score in either direction, completely bonkers I know, and no one has been able to give me a straight, or consistent answer. For me, it's simply a YEMV.