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Fico Changes Authorized User Account Rules 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.

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Written By:
Steven Ciantro
Member National Association of Certified Credit Counselors
American Debt Enders

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