This is good news for at least 50 million consumers: Fair Isaac has announced that it has found a way to include “legitimate” authorized-user accounts and still exclude the piggy-backers! According to Fair Isaac, there are more than 50 million consumers that are legitimate authorized users on another person’s credit card. For some of these folks, this is the only way they are able to build credit histories.

Fair Isaac & Company, the firm for which the popular FICO credit scores are named, cracked down last year on the practice by eliminating authorized-user accounts altogether in their scoring calculation.  Due to the abuse of authorized-user credit card accounts by “unsavory” credit-repair services, people who legitimately were trying to build credit as authorized users have been out of luck for the past year. These so-called credit repair companies actually pay people with good credit-card histories to allow mortgage applicants with questionable credit records to be listed on their accounts. Once added, the user shares the same account record as the unrelated individual through “piggybacking”, a practice that although unethical, is not illegal.

An authorized user is a consumer who is not responsible for paying a credit card, but that card’s history is reported on the user’s credit as well as on the owner’s credit. It is a common practice for parents to make children authorized users of their cards in order to help them build credit. Additionally, many spouses obtain the bulk of their credit histories from being authorized users of their husband’s or wife’s card. These are the “legitimate” folks that will benefit from this action.

Fair Isaac says it will restore authorized-user credit accounts to the its latest FICO 08 credit score calculations while still materially reducing any potential impact to the score from tampering. The change is expected to take place shortly. Of course, legitimate authorized users need to remember: this is only GOOD if the account you are attached to is in good standing, so be careful!!

Read a written statement from Fair Isaac on this (and other topics) by clicking here.

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