Credit Scoring 2008

Credit Report with Authorized Users Trade Lines

Last year Fair Isaac Corp. announced its decision to exclude consideration of authorized user records from its credit score formula. It was a rather tough decision for many young people building their credit histories and for people with troubled credit looking for a way to recover. As a rule, being an authorized user on a good credit account could raise the users' credit scores and improve his/her credit report records.

However, the new FICO score of 2008 was at first meant to diminish and even eliminate the significance of authorized users trade lines in a person's credit report. The reason is the fast growing rate of abuses of this very practice, which, as a result acquired the definition of Piggybacking.

So, according to the new FICO score project, which has not been implemented yet, a person could still be added to a good credit customer's account but the benefit of it was nothing more than just access to the account and the ability to make payments with it.

Lots of limited or damaged credit history owners lost the opportunity of quickly and effectively boosting their credit scores. However, Fair Isaac Corp insisted that it was a compulsory measure to take as authorize user practice had turned into a new kind of fraud and, consequently, made credit more expensive and less accessible for all credit consumers.

A few years ago there appeared private companies that made a fraudulent use of authorized user practice. They acted as middlemen between customers with good credit ratings and those who looked to repair info in their credit report.

In their business good credit customers were willing to earn from selling their points to people who were ready to pay fortunes to have their credit reports look attractive for future potential lenders. So, these private companies buy good points, resell them and pocket the difference.

The bad credit users benefited from the simple fact of being authorized and might never see the credit card at all. That's it. As a result, extended lines of credit became easily available to people whose spending habits and resources would only allow them to qualify for bad credit applications.

Fair Isaac Corp. has however found a solution to include the consideration of authorized users records in a credit report but to detect those who have been fraudulently authorized. The device of detection has not been revealed but Fair Isaac promises to get all the credit bureaus to implement the technology as soon as possible.

Once put in practice, the new technology will make it much harder to manipulate with the system and will enable credit bureaus to filter misrepresentation.

This is good news for young people whose parents are willing to help them on heir way to good and strong credit history. This is also good news for desperate customers who are trying to recover from credit failures and have will and resources to do it.