Credit Cards & authorized users

In 1974 the Equal Credit Opportunity Act helped married woman establish credit by their husbands adding them as an authorized user on their accounts.  This was needed as often the spouse did not hold a job outside the home.

Years later the Federal Reserve Board extended this provision from spouses to anyone the card-holder wants to add as authorized users.. even minors.

While this ruling is GREAT for family/spouses… BEWARE!      Remember that the credit activity is reported both ways.  IF the card-holder goes bad on his credit, the authorized users gets dinged as well.    And, beware of authorized users who have no regard for the privelage of using credit!  

Fair Isaac Corp (FICO), will be unveiling a new version of its credit-score system in September (stay tuned for a posting re), it will close the loophole that allows piggybacking by authorized users.     “Piggybacking” means allowing someone with no credit history or bad marks to ‘piggyback’ on another’s good credit.  This is being viewed as fraudalent in light of the extreme practices going on in the market.   

That is, have you seen internet based companies thaqt promise to get anyone a GREAT credit score.. no matter what the credit?  What they are doing is brokering credit scores!   They set up deals, for fees of course, where those with poor credit “rent” space on the credit card accounts of people with good credit!

THIS is wrong!  I fully believe that adding your spouse or child to your account is O.K. and that the Federal Reserve Board did not anticipate that the ammendment to the rule would be taken to this extent.

Stay tuned… as a credit score revolution is about to take-off


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