Credit scoring method changed for authorized users

There has been some debate in the past about the use of authorized credit lines to boost credit scores. Some argue that this is fraud and others have said that as long as everybody is aware then it shouldn’t be a problem. Today Fair Isaac announced that they will ignore authorized-user credit card accounts when calculating credit scores.

To combat fraudulent manipulation of credit-risk scores, Fair Isaac Corp. plans to end the practice of giving borrowers additional points for being an authorized user on another person’s credit card account.

You can read the full news story here.

Under the old rules if you had poor credit you could sign up to be an authorized user to a credit card in good standing. This could be your parents account, your siblings or any other person willing to take the risk with you. The verbal agreement is of course that you will not have access to the credit card, only that your name will be on the account for a period of time. By signing up, your credit score will immediately begin improving. I’ve seen peoples’ scores jump hundreds of points in just a few months.

Of course, all of this comes to an end today. From reading this news article it appears the process has been abused by companies promising to quickly boost people’s credit scores.

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