OKLAHOMA CITY, Okla. (7/17/07)--If you've been "piggybacking" on someone else's pristine credit record to boost your chances of getting credit at decent interest rates, be forewarned: Your inflated credit score is about to pop (NewsOK.com July 4).
Fair Isaac, the creator of the proprietary credit score formula, announced recently that at least one of the credit reporting agencies won't consider authorized user accounts in the scoring model. This means the practice of piggybacking likely will come to an end as other reporting agencies follow suit (USA Today July 10).
Eliminating this shortcut to good credit is bad news for young adults with no credit history, married women, and adults with limited or blemished credit histories, who are added as authorized users to a parent's or spouse's card so the card holder's payment history then appears on the authorized user's credit report. The result: They'll be forced to pay more for car loans, credit cards, and mortgages.
If you have no credit history, consider boosting your credit score in other ways:
- Convert to a joint account. If you're about to lose authorized user status on your spouse's account, apply for a credit card in your own name or switch the account to joint status.
- Apply for a department store or retail card. They're relatively easy to get, and they'll help you improve your score as long as you pay off your charges on time.
- Apply for a secured credit card at the credit union. You'll deposit a sum of money that typically will serve as your line of credit. Again, pay all charges on time.
- Keep all balances less than 25% to 30% of your available credit. Having a low utilization rate will improve your credit score.
courtesy of cuna.org
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