Not understanding difference in score!

[Anonymous]

Good luck, pal.

Quick postscript about your credit card payoff.  You do want to payoff ALL of your CC debt.  But you also want to always have one card reporting a small positive balance.  So here's the way to do that.

Pick one of your major credit cards as the card you will always use.  Many people make this the card with the biggest single credit limit.

Pay all cards down to $0.  That means completely zero out the current balance.

Then the next day use your main Go-To card for something: a tank of gas, some groceries, whatever.  Something you absolutely needed anyway.

Figure out when the statement for that card typically prints. 

Then, moving forward, make sure that you have paid the balance on that card down to a small positive number every month several days before that statement prints.  A balance of $10-20 is about right.  The total amount owed that appears at the top of the statement will be what gets reported to the credit bureau.

Finally, every 4-5 months, I'd pull your other cards out of your "shoebox" (where they have been sitting unused) and use them for something small.  You might end up with all of your cards reporting a small positive balance that one month, which is not a problem.  But be sure that in the month before you apply for anything new (the Alliant loan, the fourth card, etc.) that you have all cards reporting at zero except one.

[Anonymous]

CGID Got it! My two cc are now 0. 140 on my store card. Gonna pay it to 0 tomorrow. Then $15 in gas on my unsecured card. one more thing. I have a person willing to make me a authorized user on their discover. They've had the account for over 10 years. How does that work and will it significantly help? I don't like asking friends for such favors but if it's a big help I will. 

[Anonymous]

Great question about being an AU.  Here is the stuff you'd need to tell us before we could advise you.

What is the age of your oldest account?

How old would this Discover card (from your friend) be?  You say at least 10 years... any way we could nail that down to a specific year?  (e.g. 11 years?  17 years?)

Has your friend ever had a late payment on this card?

What is the card's credit limit?  What is the typical balance on it?  (You might say, for example, between $300 and $600.)

Does this person live at the same address as you?

[Anonymous]

I'm going to say definitely the account is definitely 13 years old.

Never late. They auto pay everything.

40k limit. Average balance is 2-3k monthly paid in full.
Statement has their score on it and its over 800.

Does not share my address. : /

This friend is someone who's life I saved and they feel they owe me. They don't, but I decided if I would ever ask a favor it would be something that can help me help myself, not some random ask. Thoughts?

[Anonymous]

Great!  We are really close.  The one thing you didn't mention was the age of your oldest account (not including the possible AU).  What is that?

[Anonymous]

p.s. age of my oldest account 2 years

[Anonymous]

I think you should go for it.  Unless that is, you want reserve your get out of jail free card (Saved Friend's Life -- Get Any Wish Granted!) for something huge in the future.

If FICO ends up classiying you as a "legitimate" AU, then you'll instantly get a long credit history on all three reports. This is will be SWEET.  A nice help for you in the next few years.  The kicker is that it might classify you as not a "real" AU.

Examples of real AUs (from FICO's perspective) are a mom's son, a husband's wife.  At the other end of the spectrum are two people who barely know each other and are in the AU relationship purely for one person to increase his credit score.

FICO has some weird totally secret way of trying to detect people it regards as being on the illegitimate end of the spectrum.  I asked if you lived together because I thought it was possible that could help.  So would sharing a last name.

But the bottom line is that I think you have a good shot at FICO considering you legitimate.  So have your friend add you, and then see what happens.  Personally if you really want to know if it worked, wait until you have achieved some stability in your profile (e.g. after all your CC balances are paid down and have reported their new status to the credit bureaus).   Then pull your scores.  Then have your friend add you as an AU.  Wait till the AU account is appearing on all three reports and then pull your scores again.  If you get a big jump, then it worked.

Just one thing:

Only use your AU status for the age.  Treat your credit cards as if you didn't have his 40k limit affecting your utilization.  It's crucial early on that you develop a habit of paying your cards in full and keeping the reported balances on the cards low.  Otherwise you'll develop bad financial habits.

[Anonymous]

CGID, if this AU account did work for the OP, what do you realistically think he'd gain from it (score wise)?

While it would help him no doubt, I question whether or not it would be significant.  If he has 3 CC's now and his oldest is 2 years, let's say his AAoA is 1 year.  This is assuming he has no other non-revolver accounts on his credit report, which I don't believe the OP has stated either way at this point.  If he adds the AU account and it works, his AAoA would move to 4 years.  While that definitely crosses a threshold, possibly two, I'm not sure that would make a huge difference in his scores.  I know that the 15% of FICO scoring that makes up account history also factors in AoOA which would of course factor in a 13 year account instead of a 2 year account which is a significant improvement, but my understanding was that this piece of that slice of the pie carried less weight than AAoA.  I'm not really sure though.  Anyway, I was just curious how many points you felt that the OP could potentially gain assuming that the AU account did get factored into his profile.

[Anonymous]

Hey BBS!  For all the reasons you give, this is why I said he might want to reserve cashing in on the You-Saved-My-Life favor until he really needs somebody to save his life.  He's not gonna get that big of a bonus with the AU trick.

That said, he will get some bonus.  A key thing to bear in mind is that Age of Oldest Account is one of the three factors that are used in scorecard assignment.  As long as his Age of Oldest is a small number he'll be be placed in one of the more limited scorecards.  Admittedly, he's in one of the dirty scorecards now, but he's working on getting all his derogs removed, so it would be nice for him to be in a scorecard giving him a lot of room for his score to grow if and when his profile is clean.

I am bad at predicting score increases when there's lots of confounders, especially derogs present, so I really have no good guess as to the benefit he'll get now or when his profile is finally clean.  Great question, but I honestly do not know. 

Even though his Average Age of Accounts (different factor in case other folks are reading this) will not be increased a lot, it will keep his AAoA above 2.0 during this year and next while he is adding accounts (Alliant loan and 4th card) and if he can exrecise some restraint will quickly enable him to cross 4.0.  An AAoA of 2.0 and 4.0 are valuable milestones, I am told, though I can't prove it based on personal experience.

My feeling is that if his buddy is eager to do this for him, there's no reason why not, though I think he should only do it if he is carefully watching his score to see if it helped him.  And he'll only know that by getting his CC balances in line first.

NOTE TO OUR OP:

The conversation I am having with BBS right now is a little arcane.  It involves some weird advanced topics like scorecard assignment.  Bottom line is that (a) if FICO doesn't view as a legitimate AU then you won't get any benefit.  And (b) even if FICO does, you might not get the full scoring benefit of the AU account until your derogs go away.  And (c) maybe the full benefit won't be that big anyway. 

But those issues aside, there's no drawback to adding it if you really want to give it a try.

[Anonymous]

CGID, great reply as always.  I hadn't considered scorecard assignment so what you are saying makes sense.

OP, would you mind sharing how many other accounts you have on your reports in addition to the 3 CCs?