Questions on being authorized users of others' new accounts

[Anonymous]

Hi All,

This is my very fist post. Glad to find a big community here.

OK, I have a question on being authorized users of newly-opened credit card accounts.  Somehow I have an impression that AU accounts does not matter much as they don't carry financial responsibility. But the two facts below show the AU account matter but give me conflicting info. Could you help me to analyze?

1. Looking at myfico credit reports, I can tell that becoming an authorized user of other's new accounts are counted as my "Accounts opened in past year". I assume that having too many "Account opened in past year" is a negative factor. So does being authorized user of others' new accounts hurt the same way? If so, maybe we shall wait a while before becoming the AU.

2. Meanwhile, I managed to have TU removed all my five authorized accounts last weekends (received their email confirmation), but not yet on the other two bureaus (though dispute forms have been mailed out). Today's three myfico reports show my TU FICO score is 754 while the other two is 764 and 767. Does it actually hurt me by removing my AU accounts? I don't have any other reason to explain the discrepance.

Could anybody explain these to me? Thank you!

P.S. A side story is that, in my TU report analysis, I was told that one negative factor is that "You have too many credit accounts." I have 29 credit card accounts in TU vs. have 34 in EQ & EX due to removal of my AU account in TU record). However, in EQ and EX analysis, I don't find such a word at all! Is this caused by the calculation model? Weird.

[Revelate]

Welcome to the forums!

Comparisons between TU and the other scores here are hard as TU is an older generation of FICO score ('98) than either of the EX or EQ products which are both '08 models:10 years difference in their implementation and a lot changed in the algorithm between these two scores so it's hard to draw a direct comparison.  Anything 750ish is an excellent score honestly so I wouldn't worry about it.

Regarding AU's: the FICO algorithm scores them as a tradeline nearly identically to any other: anything positive or negative, it's yours; however, the exception to this is in FICO '08 there was some anti-abuse allegedly implelmented (people were buying AU's, and the lenders threw a fit rightly) but nobody is stating how that was implemented for obvious reasons.

Where AU's "don't count" is on underwriting: the lender may either do an estimate to discount them, or in some cases might even ask you to remove them but that's likely rare.  In general, if you have an established credit history on your own profile and can manage your reported utilization (lots of information regarding that on this forum), you're really better off not having AU accounts on there if possible; however, there are legitimate reasons to have an AU which take precedence over underwriting decisions, and those can usually be explained away relateively easily... but if you aren't using the AU account, and you can hit a 750 anyway, I'd toss them away expediciously personally.

On the flipside if you have a pristine report with good personal history anyway the AU accounts are unlikely to hurt you much if any otherwise; whereas for my mixed file status if I had a lengthy AU account on my report, a lender say for my theoretical future mortgage would rightly not be happy with it with my mixed file (some derogatories) status.

[Anonymous]

Thanks a lot, Revelate!

After reading your comments, I conclude it is still good to have AU accounts as most likely it will help to increase your credit score. The only possible drawback is that the picky lenders may argue the high score is due to others' good behaviors so that they won't accept the score as yours. But it is still better than a lower score.

Ha, I regret that I have requested all my AU account closed and removed now. Anyway, I hope I will still stay at 750ish desipte of my fool action and that it won't affect my mortgage rate.

In a long run (my 7-year credit history is still considered "young" now), I might get rid of AU and stand alone. But now I probably should keep them. I am not totally confident I can make 750 after removing the AU accounts. Currently my 760ish have counted those AU accounts.

[Revelate]

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@Anonymous wrote:

Thanks a lot, Revelate!

After reading your comments, I conclude it is still good to have AU accounts as most likely it will help to increase your credit score. The only possible drawback is that the picky lenders may argue the high score is due to others' good behaviors so that won't accept the score. But it is still better than a lower score.

Ha, I regret that I have requested all my AU account closed and removed now. Anyway, I hope I will still stay at 750ish desipte of my fool action and that it won't affect my mortgage rate.

In a long run (my 7-year credit history is still considered "young" now), I might get rid of AU and stand alone. But now I probably should keep them. I am not totally confident I can make 750 after removing the AU accounts. Currently my 760ish have counted those AU accounts.

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If you have a clean sheet report an 7 years history (total or is that your AAoA aka Average Age of Accounts?) I suspect you'll score fine regardless in the current mortgage market: your lender's top tier is probably 720 anyway but I wouldn't make *any* changes to my credit report during the mortgage process unless explicitly requested by the loan officer, so I'd keep them for now and you can address things later if you choose.

The "young" history if that was a statement on your "reasons your score ain't higher" list, is one of those catchall reasons which can't be argued with and as such one they give to gold-plated people; in reality, that's not the case from a FICO perspective, anything north of 5 years AAoA is about as good as it gets: beyond that suffers a lot of diminishing returns.

I will be very, very happy when I'm where you are in another 4 years honestly, congrats on the most excellent job managing your credit!

[Anonymous]

Ha, thanks again, Revelate.

I mean totally 7 years. My average accounts are only over 2 years thanks to app-o-rama you know...

I was a student for most of the years so there is simply nothing in my credit report except credit card accounts. Even though I have had no late payment and only applied three or so card, my credit score stuck at 720~750. Never increase more than that.  Now I start to work, I guess my score would finally rise once I have the mortgage..

Yes, I wished I could have know your advice. But I have already had TU remove my AU accounts via online dispute and send dispute mail (as EQ and EX somehow failed to identify myself online) to the other two. Oh, boy. Anyway, whatever will be will be. I won't change anything from now on until my mortgage is approved.

[RobertEG]

A simple fact is that once you have an account of another reporting to your credit report, any scoring of your file will no longer represent your own, individual scoring risk, which is what a FICO score is primarily intended to be.

A prospective creditor has no way other than guesstimation to see your own individual score based on your own history, and thus inclusion of an AU could make the value of your score less useful in their determination.

Some creditors, particularly if the credit sought is low, will not do a more detailed review, and base their determination primarily or solely on FICO score.

However, as the level of credit being sought rises, and thus the potential risk to creditors, they are more likely to do a manual review, and seeing an AU included in  your scoring, raise concerns over value ot the score.

AUs are an excellent starting and rebuilding tool, but can raise problems as you move up the credit ladder.

[Anonymous]

Thanks, Robert. It make sense.

OK, here I update what I did on my disputes that I tried to remove the AU accounts from my credit profile:

TransUnion: I was able to do online dispute on Friday night. They removed all AU accounts next day (even though it was Saturday, which means there was no way they made that decision based on the lenders' feedback...) Anyway, I quickly realize what I want.

Equifax and Experian both somehow can not identify myself online so I failed to do it online.

Experian: I requested a free copy of my credit report (in case that I need the report number) over the phone. It later proved to be a smart decision. At the same time, I mailed my dispute to Experian. After my posting here, I conclude it matters little to have the AU on my accounts or not, but it is worse to have a "dispute status" in some of my accounts. So I called them using the report number I obtained from the phone-ordered report (they won't handle your request without such a number), and successfully had them removed my dispute. I request them to send me a confirmation email; however, I haven't received it ever.

Now, the worst case, Equifax, it didn't allow to request a copy of report over the phone (really?! come on!). So I only mailed my dispute. After discussing here, I decide to end the dispute. Then I received my Citi Identitiy moinotr alerts that warned me accont status change of my AU accounts. I immediately called Equifax but they said they had already sent the request to the lenders and that there was no way for them or myself to stop or cancel the dispute. I later followed up the lenders and got to know they either replied the respond or a new statement bill had came out so that Equifax should realize the account was closed and possibly not under my name. However, so far, Equifax's status still hasn't change. I am also not satisfied with Equifax CSR which looks most ignorant. What they can do is only to say: "No, we can't stop it". A CSR had me wait almost  half an hour and didn't answer my questions during the period (she was still on the other side, but just say, "en...wait...en...please wait". Eventually I had to declare I didn't have time and ask what she was doing. Result? She said she is waiting to see my whole credit profile?!

Anyway, the above action is a nightmare for me. Luckily my credit history is very clean. So I believe I can bear with "dispute status" in equifax. But it is really not pleasant experiance.

[Shogun]

It should all be good in the long run.  It's better to rely on your own TLs rather than at the whim of anothers.  Plus, the credit you get for an AU is lessened with the newer scoring models.

[RobertEG]

My opinion is that a dispute is the wrong way to handle removal of an AU, and thus using a dispute where it really does not apply is the source of many problems.

Disputes are to challenge the accuracy of information in your credit file.

Having an AU reporting to your file is not an inaccuracy.  It is a procedure that is accepted, and although a unique process, was requested and authorized by the reporting the principal card holder and the AU consumer and agreed to particpation by the creditor.

An AU is, by its very definiation, an "account not mine."  So one is disputing a fact.

Ergo, no inaccuracy that the CRA should become involved in, and the creditor then asked to investigate and verify the accuracy of their reporting.

The real "inaccuracy" is that the consumer did not notify the creditor that they no longer authorized the reporting, and is then asking the CRA/creditor to investigate the accuracy of authori\ed reporting.

The proper procedure, in my opinion, is to simply inform the creditor to delete their authorized reporting.... a call or letter from the principal card holder, removing their authorization for reporting the AU status to the credit report of the other.

It does not surprise me that the CRA and creditors are confused when processing a dispute over accuracy of something that has been authorized, and thus the whole process becomes a mess.