Help Me Understand AU Scoring

[Varsity_Lu]

I read through a bunch of old MF threads, but still don't fully understand how AU cards affect FICO scoring.  My wife and I are AUs on each other's cards, but we rotate cards sometimes depending on category caps. For example, right now she is carrying her AU card for my BCP account. Once we reach the $6k grocery cap on my account, she will switch  to her BCP card and I will carry my AU card for her BCP account. I am also an AU on her BCE card and she is an AU on my Savor Card.

What penalties do we need to avoid? It seems like there is an all zero penalty somehow, but also some penalty if my card isn't used, but the AU card on my account is. What's the best way to maximize FICO scoring with AUs?

[omgitsMatt]

It depends on what you're trying to do.

You'll get a penalty for having all zero on all your AU accounts on the newer scores.

But if you carry a small balance to resolve that, you'll lose out on mortgage score points.

Then, unless you test it, you can't be certain the AU accounts haven't been flagged for abuse. If they were flagged, they dont do anything for your score but you can't know until you test it.

Here are two good threads that talk in depth about several nuances of AU accounts and they're still accurate today

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Credit-Scoring-Primer-pub-5-17-20/m-p/60...

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/AU-experiment-amp-score-drops-from-small...

[omgitsMatt]

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@Varsity_Lu wrote:

What's the best way to maximize FICO scoring with AUs?

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AZEO with the AUs is how you maximize your FICO 8/9s. You still need to AZEO with your individual accounts too though.

So if you are on two AUs like you said (possibly more?), keep a $10 balance on one of them, but zero on the rest. Same with your wife.

For your mortgage scores however, _all_ zero for your best score potential. Dont have any of the AUs report a balance.

Its such a hassle sometimes, I only compulsively juggle that stuff when preparing for an app or spree. Its to much work to make sure six (3 for me, 3 for her) AU accounts are min/maxing credit scores month to month

[AndySoCal]

Around 2004 FICO introduced FICO Version 5 to correct a problem with authorized user accounts. The problem was called "credit rental" with versions before adding an authorized user account would have a nice impact on the score. What was happening people were paying people they did not to add them as authorized user onto their account for a defined length of time.  Some  consumers without the credit rentals on their credit report their scores where in the 500's with the credit rentals their score was in the 700's good enough to get a mortgage.  FiCO in version 5 brought that to an end.  If that was not good enough lenders will want all authorized user accounts off the credit report.  Why they want to see the credit score for what that consumer is responsible for.  My understanding is FICO has restored authorized users to the score but the impact will not be nearly as great as it once was. I read somewhere that FICO was able to determine the difference between "true" authorized user accounts case versus friends helping friends raise their credit scores. How FICO could tell the difference was not disclosed.

What I am about to say has nothing to do with your question.

My question is why should FICO give points for accounts that the consumer had no part in contributing to the payment history?  I can understand the stay at home mom or dad  getting credit for AU  accounts and selected other scenarios as well but not across the board.

[Varsity_Lu]

@AndySoCal 

My teenage kids all carry my BCP card as an AU on my account. I limit their spending to $200 per cycle and they know that that card is only for gas and groceries for the family or true emergencies. They each work and have their own bank accounts and debit cards they can use for their own purchases.  I've noticed that putting them on as AU allows them to get a FICO score once they turn 18 which is nice. I didn't do this with my oldest and they struggled a bit when they started pursuing a credit card.

If they don't use their AU card a particular month, are they being penalized? My account is the only card they have and they are under 18.

[omgitsMatt]

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@Varsity_Lu wrote:

@AndySoCal 

My teenage kids all carry my BCP card as an AU on my account. I limit their spending to $200 per cycle and they know that that card is only for gas and groceries for the family or true emergencies. They each work and have their own bank accounts and debit cards they can use for their own purchases.  I've noticed that putting them on as AU allows them to get a FICO score once they turn 18 which is nice. I didn't do this with my oldest and they struggled a bit when they started pursuing a credit card.

If they don't use their AU card a particular month, are they being penalized? My account is the only card they have and they are under 18.

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No, if they don't use their cards a particular month they are not being penalized.

They are being penalized if that's their only authorized user account and it's also reporting a zero balance.

To keep it simple, if you want to maximize your score potential, make sure if you or whomever has an authorized user account that the account reports a small balance. (That is not the same thing as not using their card)

[Varsity_Lu]

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@omgitsMatt wrote:

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@Varsity_Lu wrote:

@AndySoCal 

My teenage kids all carry my BCP card as an AU on my account. I limit their spending to $200 per cycle and they know that that card is only for gas and groceries for the family or true emergencies. They each work and have their own bank accounts and debit cards they can use for their own purchases.  I've noticed that putting them on as AU allows them to get a FICO score once they turn 18 which is nice. I didn't do this with my oldest and they struggled a bit when they started pursuing a credit card.

If they don't use their AU card a particular month, are they being penalized? My account is the only card they have and they are under 18.

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No, if they don't use their cards a particular month they are not being penalized.

They are being penalized if that's their only authorized user account and it's also reporting a zero balance.

To keep it simple, if you want to maximize your score potential, make sure if you or whomever has an authorized user account that the account reports a small balance. (That is not the same thing as not using their card)

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Ok. So it sounds like the bureaus can't differentiate which card is being used, just that the account is or isn't being used. Got it.

[omgitsMatt]

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@Varsity_Lu wrote:

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@omgitsMatt wrote:

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@Varsity_Lu wrote:

@AndySoCal 

My teenage kids all carry my BCP card as an AU on my account. I limit their spending to $200 per cycle and they know that that card is only for gas and groceries for the family or true emergencies. They each work and have their own bank accounts and debit cards they can use for their own purchases.  I've noticed that putting them on as AU allows them to get a FICO score once they turn 18 which is nice. I didn't do this with my oldest and they struggled a bit when they started pursuing a credit card.

If they don't use their AU card a particular month, are they being penalized? My account is the only card they have and they are under 18.

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No, if they don't use their cards a particular month they are not being penalized.

They are being penalized if that's their only authorized user account and it's also reporting a zero balance.

To keep it simple, if you want to maximize your score potential, make sure if you or whomever has an authorized user account that the account reports a small balance. (That is not the same thing as not using their card)

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Ok. So it sounds like the bureaus can't differentiate which card is being used, just that the account is or isn't being used. Got it.

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Good catch to consider that, but they can differentiate. What I've noticed is, it depends on the lender and how thorough they report and also where/how and what type of report you're looking at.

The metadata these guys farm is absolutely insane. Request a consumer report from "Early Warning" one of these days or Equifax's "The Work Number".

Out of four people (I'm including myself and three siblings I've helped get started with AU accounts), I've only had an issue with MY accounts getting flagged for AU abuse (one out of three). Once its flagged, there seems to be nothing that can be done about it. Me getting flagged is wild too, because I share the same last name, number and address as my wife. The siblings of mine all have different last names and addresses. It was only flagged on Equifax, but was fine on TU and EX.

After me, the next three people I did very different. I swiped their cards as soon as they showed up, I made a payment through Bill Pay and used _their_ account number to push the payment and then I made another charge so the first time the account reported it would have a balance _they_ built.

Once you're past the initial stage of them deciding whether to flag it or not, you dont have to worry anymore whether your AUs swipe their cards or not. They're benefiting

[Varsity_Lu]

@omgitsMatt 

Wait, you were the account owner and got flagged/penalized because you had AUs on your account? Or were you an AU on your parents account and got flagged? The account owner can't be penalized, can they?

[omgitsMatt]

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@Varsity_Lu wrote:

@omgitsMatt 

Wait, you were the account owner and got flagged/penalized because you had AUs on your account? Or were you an AU on your parents account and got flagged? The account owner can't be penalized, can they?

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No, an account holder can't be flagged. And for the record, you can't know if you're flagged or not unless you do a few months of experimenting.

The person who would be flagged would be the person who is the actual AU and all that entails is they don't benefit score wise from the account they're an AU on (this depends on the scoring model!).

And it was my wife, not my parents. Which made it all that much stranger that they wouldn't credit me for it.