credit cards

FICO 08 will score authorized user accounts

He estimates about 1 percent of U.S. consumers, or between 2 million and 2.5 million, would have ceased to have FICO scores if FICO 08 had been rolled out the way it was.

It could be a long wait before consumers can obtain their FICO 08 scores. Quinn says Fair Isaac is still revising the model with the three major credit reporting agencies, after which the company will focus on getting lenders to test and use FICO 08. He says it's too early to speculate on when consumers will get access to their new scores.

Pros and cons of authorized users

If piggybackers were gaming the system, could people still do so by getting a family member with great credit to add them as an authorized user?

Asked about legitimate authorized users inflating their FICO scores in this way, Quinn responded in an e-mail: "The innovation we are adding to the FICO 08 model will help control for the kind of score tampering you describe. The details of how it works must remain confidential."

It remains to be seen how people with otherwise low scores will benefit from their authorized-user accounts after FICO 08 is in place.

Authorized-user accounts aren't a cure-all, though, cautions Curtis Arnold, founder of CardRatings.com and author of "How You Can Profit from Credit Cards." He says credit scores look at many factors and there are bigger components to worry about.

Authorized user accounts do impact your FICO scores, but they aren't a major factor in and of themselves. Here's a look at what influences your FICO scores:

Elements of your credit score
Source: myFICO.com

Being either an authorized user or a primary accountholder carries some risk. Authorized users could see their credit score plummet if the primary cardholder defaults on that account. Primary cardholders are liable for any debt incurred by the authorized user, and high balances could damage their credit scores.

Issuers must report authorized-user information when the authorized user is the accountholder's spouse, thanks to the Equal Credit Opportunity Act of 1974. Issuers decide whether or not to report payment history data for other authorized users.

Arnold suggests the primary accountholder call and ask the issuer if authorized-user data gets reported.

If the issuer doesn't report authorized-user information when that person is not a spouse, it could make sense to add the other person as a joint accountholder. Doing that, however, makes both parties responsible for debt acquired by either party.

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