Below is an article published by the "MyFICO" Q&A forum: FICO is coming out and saying they will be changing the formula to no longer give scoring credit to Authorized User accounts! "Dear myFICO, I'm trying to build up my credit quickly so I can purchase a new home that I found and absolutely love. I was told the quickest way to raise my FICO score was to be added as an authorized user to someone's credit card who has a long history with on-time payments. Is that true? If so, how would I go about doing that? Renata Newark, New Jersey Dear Renata, Your question has been a hot topic in the news recently. First a bit of background: FICO® scores originally considered authorized-user accounts because our scientists found that in some cases that information can help us determine a person's credit risk. By coincidence, some people found it also was a way for a parent to help another family member establish a credit history. For example, a parent might add a teenager as an authorized user to an existing credit card account. The teenager could learn how to use the credit card under the watchful eye of the parent, without being financially responsible for the account. Since the bank would report the account history to the teenager's credit bureau file, it also helped the teen start building his or her own credit history. While this practice began with good intentions, recently several websites have begun offering services to boost a FICO score by adding their customer as an authorized user to a complete stranger's credit account in good standing. The customer never actually gains access to the credit account. Instead, the arrangement intentionally misrepresents the customer's own credit history to the FICO scoring formula, as well as to lenders and other businesses. Courts and government agencies have yet to rule on whether this practice is legal. However, to protect FICO scores, Fair Isaac is changing its FICO scoring formula so that it will no longer recognize authorized-user accounts. So, to answer your question: no, we would not recommend that you be added as an authorized user to someone's credit card just to raise your FICO score. However, there are definitely things you should know about your FICO score and establishing your credit history â?? this free booklet is a good place to start. You might also benefit from hearing what people are saying about establishing credit on the FICO Forums. Trying to buy a home when you have a limited credit history can be difficult, but be wary of web sites stating they can boost your FICO score to help you qualify for the best rates on a mortgage. In fact, some of these sites may be advising you to commit mortgage loan fraud â?? such as by providing false financial documents in your loan application. Sorry to say, there is no quick solution to building up your credit history â?? like getting into shape; it takes time and diligence. Hopefully, we've provided some advice to point you in the right direction. Almost as important as knowing the things you can do to establish your credit is knowing the things you shouldn't do! From all of us at myFICO, we wish you success in building your credit and finding your dream home. Sincerely, myFICO Team"
I am not sure how you relate the ECOA to this reporting issue......the AU reporting issue has nothing to do with denial/acceptance of credit. In fact, it appears the ECOA would be in spirit with NOT reporting AU accounts for FICO scoring.....
FDIC: FDIC Law, Regulations, Related Acts - Consumer Protection From 202.6 (6) Credit history. To the extent that a creditor considers credit history in evaluating the creditworthiness of similarly qualified applicants for a similar type and amount of credit, in evaluating an applicant's creditworthiness a creditor shall consider: (i) The credit history, when available, of accounts designated as accounts that the applicant and the applicant's spouse are permitted to use or for which both are contractually liable; {{4-30-03 p.7216}} (iii) On the applicant's request, the credit history, when available, of any account reported in the name of the applicant's spouse or former spouse that the applicant can demonstrate accurately reflects the applicant's creditworthiness.
I wonder how soon this change will take effect. I'm trying to get my score up to buy a home, and was about to make use of the authorized user trick. I think I'll do it anyway just to see if it helps because things like this seem to take a long time to get enacted. Anyone know any timelines? Thanks, bushka
Yes and we intend to do so in spirit of the ECOA. If anyone would bother to read the regs of the aforementioned statue, they could ascertain that the action that Fair Issac plans is illegal. I find that ironic given their stated rationale but, I digress. If they do implement a change, it won't be long before a windfall of consumer litigation ensues. I don't see how any judge or jury could hold the change lawful in light of the ECOA. This isn't going to last . . .
But per your post, the main tenet is that an AU is NOT contractually liable, and, per (iii), an AU account, (and its activity) also does NOT ACCURATELY reflect creditworthiness. Again, I do not see how you interpret this act to say the new FICO modeling violates it.........
None of those points are really what I thinik a judge would consider. The most relevant argument against buying seasoned tradelines of persons unknown to the purchaser is that the purpose of the transactions are to artificially raise the score of a person with no credit history or a poor one to a level that will allow the person to make purchases which they would otherwise not have qualified for. That means that the person applying for the new credit is providing false and misleading information to lenders which is in and of itself a criminal act under federal law. Now then, let us suppose that a couple walk into a mortgage broker's office and want to buy a home. The broker pulls their credit scores and both have scores well above 700 as a result of having purchased seasoned tradelines. The broker submits the loan application to Shady bank who lends the money to buy the home. The couple move in and default within a short period of time and the lender starts investigating a bit further and sees that the couple actually had a shallow credit history and if it were not for the authorized user thing their scores would have been much lower. Shady bank then makes a criminal complaint against the couple. The criminal investigators question the couple about their high scores and they question the person who added them as authorized users. They find that the persons have no other relationship to each other and don't even know each other. They discover that the couple paid a company to make the purchase. Now we have criminal conspiracy to defraud lenders. The company who sold the couple their tradelines is now charged with both civil and criminal Rico violations for conducting an ongoing criminal enterprise. Think that can't happen? Think again because there is a current federal case that just got started in which parts of that scenario have been argued. I don't feel that I am at liberty to discuss that case or reveal any further details about the case at this time because it is an ongoing case and most of what I have said above isn't available on Pacer yet although it should be sometime today.
I guess that sums it up! The other detail I left out (re: ECOA) is that the "AU" is truly not an "AU", they CANNOT use the account, so this negated the "permitted to use" language of the ECOA. In brief, you're correct about the intent of this practice. It will be interesting to see how this case works out.
Indeed it will. Especially since the plaintiffs operate an illegal credit repair scam. First of all, they charge up front for their services, not doing as Apexcredit does. Secondly because the are operating under an LLC registered in one state but operating in another state without having filed with the Secretary of State in the second state as a foreign corporation. The state they are operating in has very strong laws governing credit repair organizations and they have failed to register as a credit repair organization or comply with those laws too. The pro se plaintiffs are also attempting to further the interests of their company but the company is not a plaintiff in the case. They claim that the company is a legal company and that the FTC has ruled that adding authorized users to the account has been declared legal by the FTC which is true of course. But somehow they apparently think the rest of the story won't come out in court. According to what is filed on Pacer they have also filed a motion for temporary restraining order which they claim to have served at the time they filed the original complaint. They reference Rule 26(b) in that motion but apparently they only read as much of Rule 26 as benefited their position because Rule 26 also states that such a motion must be served upon the defendant in a separate serving. To make matters even worse, the original service shows that 6 pages were served upon the defendant and that the motion for temporary restraining order was filed with the court a week later than the summons and complaint and contains 4 pages Summons and complaint comprises a total of 7 pages and the additional 4 pages of the temporary restraining order makes 11 pages, so the temporary restrainng order could not possibly nave been filed at the same time as the original complaint. The original complaint uses quite a bit of hear say evidence to support their claims of damages. Yes, it very well may turn out to be quite interesting but the most interesting aspect will be waiting to see how the court handles the situation. The Plaintiffs case seems to have absolutely no merit whatever so one would think that under normal situations the judge would dismiss without giving it a second thought but once the whole can of worms becomes known to the court, who knows what will happen. I just noticed that at the bottom of this company's web site they claim more than 67,000 visitors since July 4th. However if you look at the source of the page you will see that there is no counter involved. It is nothing more than a text message that they can change to their heart's desire. A thousand, maybe even two thousand might be believable but 67,000 for a site that don't even have a listing in the first 10 pages of a google search for them? Well, there are a few references to them starting on page 3 of Google but it goes down hill from there because all of the mentions of their name in google are web pages telling how bad their scam is. Some are from reporters working for major news sources. Of course, another little thing they don't seem to realize is that putting up a funny home made counter like that is providing false and misleading infomation to consumers, a separate federal offense in itself.
Yes, there is. Quite a bit more in fact. All of the filings in the case to date can be found here At least all of the filings that are posted on pacer up to the present time. I imagine that they will be updated quickly as soon as new stuff is available on Pacer. Currently there are 13 pages of filings from both sides. There will most likely be more in a few days at most.
The next shoe has dropped in this ongoing case The next shoe has dropped in this ongoing case It will be interesting to see how the plaintiffs respond if the judge signs this order. It should be working now.
I'm sure we will see quite a bit more before it is all over unless the judge just dismisses the case instead of wasting the courts time with the Calliers and their nonsense. Quite frankly I find it hard to believe she hasn't already done that.
