Credit Score Authorized User Scam Coming to an End
The sales pitch goes something like this. “Raise your credit score by fifty to one hundred points immediately”. You may have received the spam or have seen the banner ads. I consider it fraud and Fair Isaac, the creator of the Fico Score, is ending the party.
First off, there is very little that is immediate with credit scores. Everything takes time to filter through. Thats true for on time payments, late payments, credit increases, usage, etc. This “instant gratification element” alone should serve as a warning that something is amiss.
It works like this. The scam artists find people with good credit and credit lines that they are willing to rent. These people are hooked up, for a fee paid by the latter party, with people looking to raise their credit score.
The people looking to raise their score are added to the good credit person’s credit card as an “authorized user”. By adding a credit line that is paid on time and has at least 50% of the credit line available, a credit score can indeed be raised.
With the proliferation of scam artists and fraud, Fair Isaac has decided to change their scoring model to end the scams. In other words, authorized user rentals won’t work any longer.
Authorized user abuse is addressed on the Fair Isaac website as follows:
June 5, 2007 - (Minneapolis, Minnesota, USA) - Fair Isaac Corporation (NYSE:FIC) today announced that it will adjust its FICO scoring formula to ensure the continued reliability and predictive power of FICO scores. This action is intended to protect lenders and FICO scores from abuse of authorized user credit card accounts by a new kind of credit repair service that sells consumer credit card histories to credit applicants in order to purposefully misrepresent the applicants’ own credit history to lenders and other businesses.
The adjustment removes authorized user accounts from consideration by the scoring model in FICO 08, the newest version of the Classic FICO credit score which Fair Isaac expects to become available to lenders starting in September.
Fair Isaac will work closely with lenders to help them implement and benefit from the FICO 08 score as it becomes available.
As a consumer, don’t be taken in by the fraudulent manipulation of authorized user accounts. Save your money and time and take the traditional steps to improving your credit scores.
In light of today’s mortgage meltdown, fraud accusations are being pointed at everyone from the borrower to the credit rating agencies. It would be interesting to know to what extent authorized user manipulation was involved. Knowing their data capabilities, I am sure the credit reporting agencies could easily provide us with this information.