FICO WILL NO LONGER COUNTS AUs!

[fused]

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Jack_Sparrow wrote:

fused111 wrote:

FICO should distinguish btw these sleazy companies selling seasoned TL's, and parents and grandparents who teach their children and grandchildren how to manage their credit and money wisely.  These are two entirely different things.  Not sure if FICO can and is willing to recognize the difference and score properly.

A credit score measures how much of a risk you are with borrowing money. What in the world does being on daddy's card while he pays for all of it have to do how much of a risk YOU are?

There is nothing stopping parents and grandparents from teaching their children and grandchildren how to manager their credit and money wisely. This is only stopping the cheating of scores.

I applaud this move. Only us responsible people should have high scores.

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Sleazy companies selling BS seasoned TL's does not follow the rules, so says FICO at this time.  Having your children or granchildren as AU"s on your accounts is neither sleazy nor unethical.  Thanks to the companies who are selling these so-called seasoned TL's they have not only placed themselves out of business but will effectively ruin the FICO scores of hundreds of thousands or even more who have AU TL's reporting.  Yeah, I believe in self-suffiency, taking responsibilty for one's financial and credit mistakes but what does this have to do with daddy?  You can do things your way, and I will do things my way!

[Anonymous]

Quite a few people here seem to be overestimating how difficult it is for a young person to build a credit history.  On the contrary, it's too easy.

I advise a 19 year-old friend of mine on credit matters.  Her credit history is 11 months.  She has three positive TLs that report to all 3 bureaus (one of which is only 5 months old).  Her FICO is 695.  She already has CLs over $1000 on two of these TLs.  With sufficient income, she would have no problem getting a car loan.  She could probably even get a mortgage, though her short credit history would probably give her a higher interest rate than her FICO alone would merit (she'd probably get the interest rates that a 635 to 650 FICO would give).  In about six months, I'm going to have her apply for a prime CC...by then her FICO will be around 715 with no baddies, and she should have no problem getting a prime card with at least a $1000 CL. 

Of course, being only 19, she's not ready to buy a home anyway.  But by the time she's done with college in three or four years, she will probably have a FICO around 775 to 790, and have no problem at all getting any kind of mortgage or car loan.  All without any help (other than technical advice) from anyone.

[Anonymous]

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TheNewWorldMan wrote:

Quite a few people here seem to be overestimating how difficult it is for a young person to build a credit history.  On the contrary, it's too easy.

I advise a 19 year-old friend of mine on credit matters. 

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She's lucky to have a knowledgeable friend.

As I commented on another thread, anyone in college can get a credit card.  Heck, maybe you don't even have to be a student.  Just show up on campus when the CCCs have big booths where they give away MasterCard applications and a t-shirt, and they'll sign you up.  I wouldn't try this if you're obviously not college-aged, LOL.

[Tuscani]

Agreed, TNWM. You can easily be 700+ with under 1 yr of history and a TL or two.

[Anonymous]

Suze Orman talked about the phenomenon of people buying TL history on her show a few weeks ago. 

Just goes to show, if you have enough money to spend you can buy just about anything... including a high FICO score!

I find the replies interesting.... and the more I read the more double standards I see.

Why is it that people think it's not okay for someone to buy a TL's history, but it's perfectly acceptable to have a good friend or relative do the same thing for free?  After all, the outcome is the same... an artificially enhanced score.  Is one person more credit-worthy than the other?

 After all, a FICO score is simply the calculated probablility of a person's likelihood of defaulting on credit at a particular point in time.  Nothing more and nothing less.  

Fair Isaac has no choice but to close this loophole.   Your score is supposed to be a calculation of YOUR likelihood to default... not your parent's, friend's, a stranger's that you've paid, or even your spouse's.  How does being an AU tell them anything about YOU... except maybe the fact that you know (or have paid) someone with good credit? 

It really has nothing to do with the ratio of how many people will now fall into higher scores and how many into lower... it is, what it is!

There are lots of things you can do to enhance your score... some obvious like reduce the number of times you try to get new credit (INQ) and keeping the amount of credit you rely on low (UTIL) and letting YOUR account age to prove you can manage your debt.

There are also some, not so obvious, things which are just as important... like having a savings account for rainy days so you don't have to worry about CA's and BK's... living below your means and doing all that you can to pay your bills on time, every time.....the things our grandparents learned to do before FICO or even the CRA's even existed.

Sure, there are lots of reasons you could have baddies that are no fault of your own.  That's for you and your lender to determine... not FICO.  The score doesn't consider the reasons... just the probability. 

If you are using the credit and have assumed the responsibility to pay the debt, in essence you are joint owner, not an AU.  You can't expect FICO to know that.

Imho... if you want to bypass letting your children learn about credit through experience you can always step up to the plate and co-sign for them to have credit.  Probably not the smartest thing to do... which is exactly why attributing FICO points to their score for being an AU doesn't make them any less of a risk to you, or to a lender. 

[Anonymous]

Well said, Felicity.

[Tuscani]

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Felicity wrote:

Suze Orman talked about the phenomenon of people buying TL history on her show a few weeks ago. 

Just goes to show, if you have enough money to spend you can buy just about anything... including a high FICO score!

I find the replies interesting.... and the more I read the more double standards I see.

Why is it that people think it's not okay for someone to buy a TL's history, but it's perfectly acceptable to have a good friend or relative do the same thing for free?  After all, the outcome is the same... an artificially enhanced score.  Is one person more credit-worthy than the other?

 After all, a FICO score is simply the calculated probablility of a person's likelihood of defaulting on credit at a particular point in time.  Nothing more and nothing less.  

Fair Isaac has no choice but to close this loophole.   Your score is supposed to be a calculation of YOUR likelihood to default... not your parent's, friend's, a stranger's that you've paid, or even your spouse's.  How does being an AU tell them anything about YOU... except maybe the fact that you know (or have paid) someone with good credit? 

It really has nothing to do with the ratio of how many people will now fall into higher scores and how many into lower... it is, what it is!

There are lots of things you can do to enhance your score... some obvious like reduce the number of times you try to get new credit (INQ) and keeping the amount of credit you rely on low (UTIL) and letting YOUR account age to prove you can manage your debt.

There are also some, not so obvious, things which are just as important... like having a savings account for rainy days so you don't have to worry about CA's and BK's... living below your means and doing all that you can to pay your bills on time, every time.....the things our grandparents learned to do before FICO or even the CRA's even existed.

Sure, there are lots of reasons you could have baddies that are no fault of your own.  That's for you and your lender to determine... not FICO.  The score doesn't consider the reasons... just the probability. 

If you are using the credit and have assumed the responsibility to pay the debt, in essence you are joint owner, not an AU.  You can't expect FICO to know that.

Imho... if you want to bypass letting your children learn about credit through experience you can always step up to the plate and co-sign for them to have credit.  Probably not the smartest thing to do... which is exactly why attributing FICO points to their score for being an AU doesn't make them any less of a risk to you, or to a lender. 

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Great post!

[Anonymous]

This is of course dependent upon OCs reporting one as an AU rather than a joint owner.

[Anonymous]

In most cases  Joint card holder also recieve credit history from Primary account holder.. is look like the same as Authorized user just are liable for repayment debt! How came we find whether this person is manage debt good and creditworitness? Credit company just send update report that you are joint card holder and circle end.. when a creditors pull out your record he-she see that you are join-card holder but they dont know from what period of time

Tell me if I am wrong?

[Anonymous]

In a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin):

In the case of spouses, ya might as well go for joint accounts. If the accounts go into default, the OCs and CAs can legally report on both spouses CRs.