WIll my score go up if i am authorized user on a credit card and my wife got a 3,000 cli?

[Anonymous]

I have been on my wifes capital one credit card as a authorized user for a year now. We are trying to buy a house and we are just 1 point away from qualifying. My wife got a 3,000 dollar credit line increase on her card which i am authorized user on. Will this help me score at all?

[Anonymous]

Hi Nathan!  Welcome to the forum!

FICO gives no benefit to an increase in credit limit, if you are talking solely about the credit limit taken by itself.  What FICO cares a lot about is something called utilization.  That's the percent of a  person's credit limit that he or she is using.  (Amount of CC debt divided by credit limit.)

So the answer to your question is this.   If the increase in her credit limit caused her (or your) utilization % to go down a lot, then yes it would help you with your score.  If it isn't helping your utilization to move from a not so good to better category, then the bigger CL will not in itself help your score.

Here is a concrete example.  Suppose your total credit limit (counting all your cards and the AU) was $7000.  And suppose you had $850 in debt. That would give you a utilization of 850/7000 = 13% (after rounding up).

Then your wife got a CLI of $3000 on that card, bringing your total credit limit to $10,000.  That would cause your utilization to change to 850/10000 = 9% (after rounding up).

Most people here think that FICO begins to give you a small penalty around 10%.  So the CLI would cause you to go under 10% which would help your score.

But if you rework that example where you start with a debt of $400, you will see that you started well under 9% to begin with, so the CLI didn't help.

Does that all make sense to you?

Final thought:

Have you and your wife settled on a lender?  Bear in mind that some mortgage lenders will not give you the benefit of letting you be an AU on somebody else's account.  That's because, from that lender's perspective, your credit score is being artificially inflated by that other person.  Some lenders have no problems with it but some do.  So just be aware of that.

[Anonymous]

Yes it does thank you so much for your response. The only problem is is that our credit utilization is already way under 30 percent. It's probably closer to 10 percent. So I'm guessing this won't help

[Anonymous]

Do the math very carefully.  If your current utilization (before the CLI) is higher than 8.99%, then the CLI might help you.

If you guys just need a few points, there are other strategies we can suggest that you might not know about that could get you a few extra points.  For example, you and your wife should have almost all of your credit cards reporting at $0 with exactly one card reporting at a positive balance.  If you are not doing that, this could give you the extra points you need.

[Anonymous]

Thank you so much for your information. Another thing I had one credit card that was late back in December 2014 my mortgage broker said by January bc I've been in the clear with not missing anymore payments that my score will also increase higher. Is that true?

[Anonymous]

Your lender is claiming that the penalty for one 30-day late begins to soften after 13 months if you make perfect payments on all accounts.  He may be right, but that's more than I could swear to.  If he said two years I'd be more confident that he was right.

One reason I am skeptical is that mortgage lenders almost all use a very old version of the FICO scoring system.  In that older system, FICO was much more unforgiving about even a single late.  In the more recent models (e.g. FICO 8) FICO is much better about softening the impact once you have been a good scout for a certain length of time.  But the mortgage lenders don't use the recent models -- they use the old harsher less forgiving models.

BTW, how is it that you are checking your scores?  You said that you are just within a point of what you need.  What tool are you using to check your scores and when did you last get them?

[Anonymous]

I actually payed a little extra on fico.com and got to see fico models 2,5, 6 and 8. My middle score to which lenders see is a 639.

[takeshi74]

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@Anonymous wrote:
WIll my score go up if i am authorized user on a credit card and my wife got a 3,000 cli?

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It's never really just about the change itself but one's credit profile and how that change impacts and factors into credit profile. A $3K CLI doesn't have the same impact in all situations.  For questions like this you always have to provide enough information about credit profile for others to provide feedback.  As stated above it's not really the limit but revolving utilization that matters but revolving utilization is just one factor among many.  You mention having a late and that's an important consideration when it comes to potential score change.  While revolving utilization falls under Amounts Owed

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

and can have a siginificant impact the late (affects Payment History) has a bigger impact and will be a limiting factor.

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@Anonymous wrote:
Yes it does thank you so much for your response. The only problem is is that our credit utilization is already way under 30 percent. It's probably closer to 10 percent. So I'm guessing this won't help

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Probably not.  You can calculate the impact to revolving utilization.  Big impact (either way) comes from big changes.  If you only need one point it may help.  However, qualifying is a low bar and you'll want to aim to not only qualify but to get the best terms possible -- especially on a big ticket item like a home.

As indicated above you can reduce reported utilization and number of balances even without CLI's.  Remember that revovling utilization = balance(s) / limits(s).  To make a fraction bigger you can decrease the numerator (balance[s]) as well as increase the denominator (limit[s]).  Reported balances can be reduced by paying prior to the report dates for the accounts.

As indicated above, accounts where one is an AU aren't always considered so you may want to be careful relying on such accounts -- especially if you already have at least several of your own tradelines.

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@Anonymous wrote:
Another thing I had one credit card that was late back in December 2014 my mortgage broker said by January bc I've been in the clear with not missing anymore payments that my score will also increase higher.

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Not missing payments is a must.  Payment History is a the biggest factor and you need to aim to have 100% Payment History.  Derogs will kill your scores and keep them down as long as they're reporting -- especially when they are more recent.  If you have derogs then definitely work on addressing them.  Hit the Rebuilding subofurm and carefully research to see what you can do.

Do whatever it takes to avoid derogs in future. Make sure you're budgeting and sticking to it.  Use autopay (and any other tools) if it would be of benefit to you.