Authorized User Account Rules Change Again

In a typical knee jerk reaction, Fair Isaacs Company, otherwise known as FICO, the makers of your credit score, stopped reporting or counting authorized user information on the authorized users credit profile. Why? Because a new industry had sprung up in which people with very strong credit profiles were selling authorized user accounts, so that their good credit profile would make a positive impact on the less than stellar profile of the authorized user. This was very effective, but was considered to be cheating the system, even though it was quite legal.

So, even though, the practice had gone on for many years after a tidal wave of press coverage on the issue, FICO decided to no longer report the profile of the card owner on the authorized user account. By the way, in addition to this being done as a business, parents used it to help their children to establish credit early on, ubtil they could build up their own credit.

Well, it was not long before lenders complained, that the Equal Credit Opportunity Act, required them to consider a spouses credit history when determining a borrowers credit risk, something they claimed they could not do when FICO stopped reporting authorized user accounts.

So, if you would like to try to boost your credit score or someone else's score by making them an authorized user on your account, by all means do so. The person you make an authorized user does not even have to use the card. Your payment history on the card will automatically transfer to their credit report, and provided you are a timely payor, and do not use more than 20% of the available credit, and help improve the authorized users credit score.

Just remember, if the authorized user does use the card, you as the card holder are legally responsible for the debt, not them.

If you enjoyed this article and would like to subscribe to our newsletter, simply visit: FREE CREDIT COUNSELING NEWSLETTER and leave your email information--we never share your information, or spam you. Written By:
Steven Ciantro
Member National Association of Certified Credit Counselors
American Debt Enders
Help@americandebtenders.com
877-766-2465

Comments

[arizona bankruptcy attorney]

There are always people who learn the system and then try to cheat it. Happens in every industry.

[steven ciantro]

Of course, that is absolutely true. it's human nature. The purpose of the article is to educate people to what is--there was plenty of press coverage when the authorized user advantage was taken away--but not one word when it was restored. Thank you for the comment.