FICO's About Face
John,
John, I heard that FICO isn't going to ignore authorized user accounts in FICO '08 any longer. True or False?
Stanley from Largo, Florida
Stan – You heard correct my friend. In August 2008, Fair Isaac announced that they have reconsidered their decision and will NOT exclude authorized user accounts from the calculation of the FICO score in FICO '08. I believe this is great news for a variety of reasons.
- The tens of millions of people who did nothing wrong will NOT see their scores penalized because of the deeds committed by a small number of credit repair companies. The reason for FICO's initial announcement last year (link to article please) was because of the threat to the integrity of their scores posed by piggybacking.
- Fair Isaac states that the reason for their change of heart is an issue with the Equal Credit Opportunity Act, Regulation B. Specifically, that by not including authorized users in the calculation of a credit score it could unfairly misrepresent the credit standing of the applicant.
- Approximately 2-3 million consumers won't lose their FICO scores. Estimated projected that under the new scoring system about 1% of the population would no longer qualify for a FICO score. Have you ever tried to apply for a loan without a FICO score? It's next to impossible because of how automated application underwriting systems work today.
- The hunt is now on for the credit repair vermin. Credit.com has long advocated that instead of removing authorized users from consideration, FICO instead should work with local and Federal authorities to help enforce existing credit repair laws, which make profiting from piggybacking illegal. It's now clear that this is happening. In fact, we at Credit.com are currently working with the Attorney General's office from at least one state to help them to do away with these bottom feeders.
- FICO's new score will still do away with piggybacking. According to Fair Isaac they have figured out a way to identify an authorized user account that was caused by piggybacking versus one that was caused by legitimate practice. But BUYER BEWARE, it took about 24 hours for the credit repair filth to claim victory and start marketing again. They are ignoring the fact that their services are still illegal and by investing in them YOU could be committing application fraud.
As you can see I'm not a fan of piggybacking. I was also never a fan of FICO's initial solution to the problem. I'm very satisfied that they reconsidered their decision and now WE can go on with our lives without having to worry about this. When I say "we" I really mean WE. I'm the authorized user on a few of my wife's credit cards. Fully legit!! I work, get paid, contribute to the family's bottom line, help pay those bills, and deserve equal credit for the management of those accounts.
Please keep your comments coming. I can be reached at AskJohn@credit.com
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