The idea of adding an authorized user to a credit card account is often considered to be as risky as cosigning a loan: many advise not to do it. There’s always the lingering fear that an irresponsible individual could ruin your credit profile if you give him or her the benefit of the doubt. Unlike… Read More
Having a family member add you as an authorized user is one of the quickest, most effective strategies for consumers who are looking to establish and build credit, whether you’re new to the U.S. or just starting out. In fact, it’s the first strategy many experts recommend for young adults that are just starting out…. Read More
The Credit.com Forum recently saw this post about how credit scores consider authorized users on credit cards: Is Dave Ramsey right about authorized users? “I saw that this was published through several sources within the last week. I thought being an authorized user could at times be beneficial to the authorized user….” Nationally known author,… Read More
Many consumer groups have spoken out against rule that was designed to prevent borrowers from obtaining credit cards they can’t afford, but has also stopped stay-at-home parents from getting any such account. Now, the federal consumer watchdog is moving to fix that issue. One provision of the Credit Card Accountability, Responsibility and Disclosure Act of… Read More
Sam is a busy New Yorker who’s savvy about his credit. A recent college graduate working his first job in the city, he got his first credit card last year, and he uses it wisely. He charges only $100 or $200 a month, enough to buy groceries and build up a credit history, but it’s… Read More
These days, many consumers are quite aware of the role their credit score plays in their daily life, as it can affect everything from their credit qualifications to the interest rates and fees they face on various accounts in their name. But one critical misstep many consumers make, particularly if they have kids in their… Read More
Last week, I wrote about how the process of piggybacking is dying a slow and painful death. This week, I’m going to explain to everyone out there why the companies who facilitate piggybacking are not only credit repair organizations but are also violating the Credit Repair Organizations Act (CROA).
This is certainly a blast from the past. Piggybacking, the process whereby a consumer pays to be added to a stranger’s credit card account as an authorized user, was all the rage in 2007. The theory, a sound theory at that, was that adding a credit card with a high credit limit, clean payment history, and a low balance to a credit report would improve your FICO credit scores. At one point the practice became so popular that FICO announced that in their new model (FICO 08), authorized user accounts would not count at all. After some complaints from lenders, FICO announced that they would take a more surgical approach and weed out the illicit authorized user accounts but still count the legitimate authorized user accounts.
Despite FICO roll-out delays, authorized user accounts are not likely to be counted in credit scores. Most lenders and credit score users have figured out the scam and adjusted their models accordingly. Buying an authorized tradeline is a gamble at best and most-likely a huge waste of money. There is no “grandfathering” of these authorized accounts. Even if they do manage to get you a score boost now, the increase will disappear once everyone converts to the new scoring formula.
I have 2 Bank of America cards that are maxed out. I have other credit cards with zero balances totaling about $50k in credit limits. I am under the impression that if I spread the balances out from the 2 maxed cards across 5 cards in order to have my balances at under 50%, that will help my FICO score.