Hi, just a quick question? My husband and I will be purchasing a house soon and I was just tying some loose ends on my credit. I found out I am an authorized user on one of mother's department store accounts. Pulling my credit report there is a balance of $1200.00 on the account. Everything is paid on time, but how does this affect me when I go to get preapproved for a mortage?
ALWAYS PAID ON TIME...no big deal. It is not worth getting rid of. AUTHORIZED USER...no contractual requirement to pay, IT IS NOT A "JOINT ACCOUNT"... AND IT'S ONLY $2,000!!!
DOESN'T MATTER - when the RMCR (residential mortgage consumer report) is prepared for the mortgage approval, anything listed as "authorized" will be removed. Not sure if this is done automatically by Fannie Mae's Desktop Underwriter software or not, but it can be done manually. It's kind of ironic - nobody's sure if FICO score is + or - affected by authorized user accounts being reported ... yet the percentages (debt to income, housing to income) are still figured manually, so someone has to "look" at the report. Look at the bright side - if it helps your FICO but screws up your %s, that can be manually adjusted. The other way around (hurting FICO) can't be manually adjusted, just noted as a compensating factor. Good luck!
Touching on a different area of home loans and existing credit. I would leave it as is and if the company has a problem with it then tell them you will get a letter stating you have removed yourself. Some special government housing loans will adjust your house payment by your debt to income ratio. I went through and closed out a number of my cc's and bought a new house through a rural development loan and it made my house payment higher because my debt to income ratio looked so darn good. In that case I kind of hurt myself. I would just let it ride unless you have a ton of credit showing on your bureau.
