Cancel seasoned high utilization auth account cards??

[Anonymous]

Hi, first post, these forums are a great resource. I am trying to improve my credit scores in anticipation of taking out a mortgage soon. My score is 730. My report shows an existing mortgage and a few credit cards, which I pay off in full each month, as well as one small derogatory item which I am disputing. My credit report also shows that I am an authorized user if two credit cards, the primary account holder is a wealthy relative. These accounts have been open for 15 – 20 years each. They have high balances each month (combined, the monthly bills can be $50,000 - $120,000 per month). They are also paid in full each month by my relative. They tend to show very high utilization, as one is an Amex and the other a M/C that tends to get filled close to the credit limit each month, but also paid off in full.

 

I trying to decide whether to cancel my authorized access to these accounts. On the con side, I can see the cards hurting me because of high utilization. I also am concerned that in reviewing a credit application (as opposed to a Fico) the balances may look very high relative to my income. On the pro side, the age of the cards and their longtime perfect payment history probably help my score somewhat.

 

All advice about which way to go is much appreciated. Thanks.

  

[Anonymous]

While I don't know a lot about mortgages, I'm pretty sure the lending officer would be able to tell that your an AU, and not the person in charge of footing the bill, and that you're using it for a credit bump.

How old are your personal cards? What are their limits?

The utilization is probably killing your score unless your have very high limits on your personal cards.  But, the AU cards probably are helping your AAoA. 

[haulingthescoreup]

Hi, welcome to the forums!

Is this "credit score" a FICO score? You have three classic FICO scores, one from Equifax (EQ), one from TransUnion (TU), and one from Experian (EX), which unfortunately cannot be purchased by consumers any more.

If your credit score is a FICO score, what are the negatives listed, in order, on screen two? Also, what are the positives? --although those aren't as useful as indicators. If high util, or too many accounts with balances, or something similar, is listed near the top of your negatives, the AU accounts are probably helping more than hurting.

My guess is that you're being hurt by the cards. On the other hand, if they have such high CL's, it's possible that they aren't being calculated in your revolving util at all. This is why it's important to look at the negatives on screen 2.

If you got your score from somewhere else (TrueCredit, freecreditreport-dot-com,etc.), they are FAKO's. Both the scores and the advice are worthless, although having access to your credit reports is great.

[RobertEG]

When you app for a mortgage, FICO score is, as you know, just a part of their consideration.

They will do  full manual review of you CR, along with many aspects of your finances, such as total debt and income, that are not a part of FICO.

AU accounts are a false read on your personal credit risk.  AU status is obtained, not based on your personal, proven credit risk, but upon that of another.  They may be helping your FICO score now, but wont impress a mortgage lendor very much.

Fair Isaac proposed doing away with AU accounts in their credit scoring a few years ago, but due to much outcry, backed off.  But they are still not accounts that future lendors give much credence to.

What if wealthy relative, for whatever reason, goes delinquent, or over limit?  You have no control over this.

I rely upon myself, for I can control that.  Your choice is, of course, yours.

[Anonymous]

Thanks for the replies, and sorry for being less than clear:

The score I have right now is an Equifax FICO score from myFICO. On page 2, the cons are:

1) High revolving balances - The page says that my revolving balances are about $26,000. Of that, about $13,000 belongs to the card on which I am an AU. The rest is mine, between two credit cards and a bank line of credit. All these accounts (both the ones I own and the ones I am AU on) are paid in full each month by the due date.

2) Missed payments - I will likely dispute this as I have no recollection of it, but according to the credit report a May 2007 payment on a car lease (which ended in mid-2008) was received less than 30 days late. Otherwise, I have a perfect payment history.

3) New account - I opened a store charge account about a year ago.

The pros are:

1) No serious delinquincy

2) Long account hsitory - I think the AUs, which both date from 1988, help me here.

3) Bills paid on time recently

The two AU cards are an Amex and a Chase Mastercard. The Mastercard is the one which is reflected in my revolving balances total. The Amex is not, although my own Amex is. Since both of the AU cards date from 1988, maybe I should cancel that Mastercard which is affecting my balances, but keep the Amex for the age. On the other hand, maybe if the Amex balance is not affecting me, the aging will not help either?

Also, as I will be moving in about six months, there is a decent chance I will need to take a short term HELOC or home equity loan on my current home before going for the mortgage on the new home. The lenders have indicated to me that while they can manually override consideration of AUs, minor derrogatory info and similar items when considering a mortgage app, they don't have the same power when considering a HELOC.

Again, all help appreciated, and thanks.

[Lel]

How would the length of credit history change if you were to be removed as an AU on these high util/high balance cards?  That is, what would be your own personal oldest account?

What would you utilization of revolving credit be if you were to take the balances and CLs of the AU account out of the picture?  You mentioned that you have a CC and revolving balance of about $13,000 that is your own, so your utilization might still be very high.  Your util might actually go up, depending on the CLs of the AU accounts and your own personal CLs.

Why do you need to get a HELOC so close to moving?  You will get hit with a new inquiry, a new credit account, and shortened average account age by getting a HELOC now.  Also, many lenders impose a hefty early account closing penalty if a HELOC is not opened for a minumum length of time. 

[haulingthescoreup]

In the meantime, you might want to consider paying your bills before the statements post. That way, $0 will be reported to the credit bureaus, which will help your util. (Don't know if you can persuade the cardholder of your AU cards to do this, of course.)

It's basically a matter of paying about 2 weeks earlier than you would otherwise have done, and it can make a world of difference in your FICO's.