Credit Deals - FICO Score for Authorized Users

A credit score is one of the most influential numbers in people's lives. This three-digit number is used by lending organizations to estimate the trustworthiness of a potential customer. For those customers whose FICO score is low, it's more difficult to get access to credit cards, especially those with favorable features.

Fair Isaac Corporation, the company which developed its effective FICO score technology, said it would consider again authorized user accounts. It's the second time in this year when the company is revising its scoring formula. It means that authorized users again have a good chance to improve their FICO scores. Learn more about this issue!

Probably everyone who starts establishing a FICO score knows how important this number is. People with low FICO scores are ready to pay mega bucks to credit-repair companies which promise to boost their scores within a couple of weeks or even days.

And actually that was the main reason why Fair Isaac stopped considering authorized user accounts in its scoring formulas. The point is that many companies used to take advantage of this technique. Firms specializing in credit repair used to bring together those with weak histories and good-score customers. For $1,000 or more, a subprime borrower was added as an authorized user on the account of a person with a high score, and he or she could see the score go up.

An authorized user on a credit card has the right to use the plastic without being responsible to pay the bills. You can become an authorized user on your spouse's account. Parents also add their kids as authorized users to their accounts so that youngsters have an excellent chance to establish their FICO score.

However, this method of building a FICO score may be good or bad, depending on a person who's ready to add you to the account. If a person to whose account you're added makes a late payment or what's worse, defaults, bad marks will also appear in your credit report. That's why it makes sense to choose carefully the person you can trust to, the person whose financial skills are good enough.

Fair Isaac experts estimated that almost three million authorized users could have been affected by the first change to the scoring formula. As for lending organizations, they didn't approve this change, because they became unable to estimate trustworthiness of spouses. By law, they need to consider both spouses' reports. With the old FICO formula it was an easy task to do.

Fortunately, Fair Isaac restored the old scoring formula, though promised to foil attempts of credit-repair companies to game the law and make money on those people who want to boost their FICO scores. However, it's not clear how the company is going to do this.

All in all, authorized users again have a chance to improve their FICO scores, though experts share the opinion that the best way to establish good credit is to apply for a plastic and open a new account in your name. You can do this online, without even leaving your home.

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