No more credit-line sharing
Used to be family members could gang up to boost credit scores. No more.
(Money Magazine) -- A sea change in credit scoring could deflate your magic number: Fair Isaac, which calculates the widely used FICO score, recently announced that it would no longer recognize authorized-user accounts.
Popular with families, the accounts allow, say, a mom with a high credit score to share a line of credit with her child. The account history appears on the child's credit report and can help bolster the kid's score.
In the past year it became possible to buy authorized status on prime credit lines from strangers online, a practice that led to the recent change in rules.
While an authorized user's credit score likely won't drop overnight - it can take lenders months to adopt a new scoring model, and some may never make the switch - the accounts are no longer a reliable way to boost someone's score. Deal with the fallout as follows:
- If your spouse or adult child is an authorized user with no other history, have him or her get a secured card. These require little or no credit history but do necessitate a cash deposit. Once he or she proves creditworthy, it's possible to switch to a traditional card.
- If your kid is an authorized user and in college, get him his own card now (shop at cardtrak.com), as it'll be easier to get approved while still a student. Note: It takes six months to get a FICO rating.