You’re No Longer Authorized – Credit Report Changes
CRN Article, July 2007
Authorized User trade lines on your credit report will soon, no longer be factored into your FICO score model.
Becoming an authorized user (AU) on an established credit account that has a long and positive history has been effective for years in establishing good credit for your children, a stay at home spouse or significant other. The account holder could simply have a card issued to you and you would inherit the history of the account. The card holder could even keep the card in a sock drawer or cut it up. You, as the AU, would not have to use it even once. The AU would not be financially responsible for the debt if it were not a joint account. The only draw back was if the account holder missed payments, the AU report would reflect the 30, 60, 90 day late payments.
Well, this was one of the tools available to people to accelerate the increase of their credit score after a negative credit event. Probably not even a well known or often used tool, comparatively. It was, however, one of the methods that I have, for years, suggested to consumers as a way to increase scores or off set the bad items. Not to go out and rent someone’s credit for a fee (which is reportedly why this once useful avenue is being shut down). No, I would encourage people to network with their family and friends to look for a hand up, not a hand out.
It has been my experience that the vast majority of people that suffer their way through a negative credit situation ended up there as a result of unforeseen events. Things like divorce, job loss and health related issues (their own or a loved one). To experience any of these is difficult, at best. Then, to be placed in credit purgatory for 7 plus years only adds to the frustration. Some of life’s trials are brief, some longer term. Depending on the severity, credit reports are the last thing on your mind.
At some point, though, when you are on the road to financial recovery, you will undoubtedly find that re-establishing credit or getting credit on good terms is a valuable asset. If you can jump start it with the help of someone close to you, I often encouraged it.
Starting in September of 2007, Fair Isaac Corp., who provides the FICO score model the vast majority of lenders use in calculating credit risk, is reportedly going to implement code that will cease the factoring of AU accounts. AU trade lines will still show up on the credit report, it just won’t show up in the credit score.
The Vantage score model that was rolled out last year as a collaborative effort by the 3 major credit reporting agencies, Equifax, Transunion and Experian, is said to currently not include AU accounts into its scoring model.
The news reports state the growing industry of selling ones good credit to a stranger as the reason for the change. So, essentially, a few entrepreneurs looking to turn a profit have canceled out the option for all. But, how does this action conform to the laws that require the reporting of AU accounts in the first place? The Equal Credit Opportunity Act, and other laws that require AU for spouses are there for a reason. Perhaps since the AU trade line will still show in the report the law is still being adhered to. Maybe this action by Fair Isaac could somehow be proven to be prejudice or non compliant in their action. Time will tell. For certain, they plan on moving forward with the plan to stop factoring the AU account into the score beginning next month. This will mean one less tool in this credit coach’s tool belt. For now.
There are many other tools to use when approaching debt and credit issues. Taking a proactive and informed approach is the best strategy to start with. Get educated!
Contact Consumer Recovery Network for a free debt management consultation today.
Because Debt Happens.
Authorized User trade lines on your credit report will soon, no longer be factored into your FICO score model.
Becoming an authorized user (AU) on an established credit account that has a long and positive history has been effective for years in establishing good credit for your children, a stay at home spouse or significant other. The account holder could simply have a card issued to you and you would inherit the history of the account. The card holder could even keep the card in a sock drawer or cut it up. You, as the AU, would not have to use it even once. The AU would not be financially responsible for the debt if it were not a joint account. The only draw back was if the account holder missed payments, the AU report would reflect the 30, 60, 90 day late payments.
Well, this was one of the tools available to people to accelerate the increase of their credit score after a negative credit event. Probably not even a well known or often used tool, comparatively. It was, however, one of the methods that I have, for years, suggested to consumers as a way to increase scores or off set the bad items. Not to go out and rent someone’s credit for a fee (which is reportedly why this once useful avenue is being shut down). No, I would encourage people to network with their family and friends to look for a hand up, not a hand out.
It has been my experience that the vast majority of people that suffer their way through a negative credit situation ended up there as a result of unforeseen events. Things like divorce, job loss and health related issues (their own or a loved one). To experience any of these is difficult, at best. Then, to be placed in credit purgatory for 7 plus years only adds to the frustration. Some of life’s trials are brief, some longer term. Depending on the severity, credit reports are the last thing on your mind.
At some point, though, when you are on the road to financial recovery, you will undoubtedly find that re-establishing credit or getting credit on good terms is a valuable asset. If you can jump start it with the help of someone close to you, I often encouraged it.
Starting in September of 2007, Fair Isaac Corp., who provides the FICO score model the vast majority of lenders use in calculating credit risk, is reportedly going to implement code that will cease the factoring of AU accounts. AU trade lines will still show up on the credit report, it just won’t show up in the credit score.
The Vantage score model that was rolled out last year as a collaborative effort by the 3 major credit reporting agencies, Equifax, Transunion and Experian, is said to currently not include AU accounts into its scoring model.
The news reports state the growing industry of selling ones good credit to a stranger as the reason for the change. So, essentially, a few entrepreneurs looking to turn a profit have canceled out the option for all. But, how does this action conform to the laws that require the reporting of AU accounts in the first place? The Equal Credit Opportunity Act, and other laws that require AU for spouses are there for a reason. Perhaps since the AU trade line will still show in the report the law is still being adhered to. Maybe this action by Fair Isaac could somehow be proven to be prejudice or non compliant in their action. Time will tell. For certain, they plan on moving forward with the plan to stop factoring the AU account into the score beginning next month. This will mean one less tool in this credit coach’s tool belt. For now.
There are many other tools to use when approaching debt and credit issues. Taking a proactive and informed approach is the best strategy to start with. Get educated!
Contact Consumer Recovery Network for a free debt management consultation today.
Because Debt Happens.
