It used to be that when you added an Authorized User to a CC account, the date showing for that user would mirror the date on the parent account.
Then primary users realized that by adding AUs to their older accounts, they could effectively improve the credit profile of said AUs. A cottage industry arose where people would sell access to their cards. As you might imagine, CRAs and creditors were not celebrating this.
It appears that at least some issuers have responded by aging an AUs account based not on the account age, but rather on when they were added the account. I discovered this accidentally this weekend, reviewing a sibling’s profile on CreditKarma: three of three Amex accounts exhibited this behavior.
My question: can we confirm that are their any issuers who still use the actual date of account opening on AU cards, rather than the date the AU was added?
Amex use to list the opening date of your oldest Amex account for every account you opened after that. This change is likely a consequence of fixing that, not any sort of response to AU manipulation. And I believe Amex handles AU cards more like an individual account than just an add-on to another account, at least moreso than other issuers, so it’s likely their account hierarchy/system structure causing this unique treatment.
I’m not talking about different card numbers for AUs. Amex is one of the few (only?) that lets AU cards have their own login profile, they include language holding the AU responsible for purchases along with the primary, etc.
My experience has been the opposite. They may report nonpayment to an AUs report, but AUs aren’t generally liable to the issuer for their charges. It comes up sometimes when the account owner dies. AUs aren’t liable (generally) even when it’s their particular charge. I’m not aware of Amex’s rules specifically.
I think what glitch is saying is they amex changed their system where newly issued cards are no longer backdated (for everyone, not just AUs). Since Amex treats AUs more like a separate cardholder than a traditional AU (per glitch), the change to their system affected AUs by not backdating to the owner’s original period. I think he’s saying it’s possible amex didn’t specifically change au backdating, but the change is a byproduct of the change to not backdate new accounts (since the au is treated similarly to a new account).
Discover still uses the date of original account opening, as of last month. I have a few slots on my discover currently rented out. Cti, BOA, US Bank, PNC, Chase all still work. I believe Amex is the only issuer that reports to the bureaus using the date the AU account was created.
Years ago (don’t remember when) there was industry talk of no longer using AU accounts for credit scoring purposes. Did nothing happen from that talk? Most of the most often used scores were created in 2004 and 2008, and making this change would probably require a new model. VantageScore 3 and 4 are newer, but I don’t think they’ve excluded AU accounts.
So did you see an instant improvement in the scores after adding the AUs?
Neat. I believe the term “FAKO” was used in the past for unofficial non-FICO scoring models that were mostly educational and non-uniform. CK uses VantageScore 3.0. VantageScore is a legitimate competitor to FICO, so I wouldn’t refer to it as FAKO.
I just did some research of my own and everyone (experian, discover, blogs) has articles stating that AU accounts count for credit scoring purposes.
The problem is removing it would have downgraded lots of people with good credit that are actually low risk. Relatives/family with good credit is a good indicator/predictor of someone’s own credit worthiness. Not really that surprising.
The problem is that for married couples, being an AU on your spouse’s account must be included (to protect widowers and divorcees from suddenly being stuck with the credit profile of a 18 year old). So to exclude AU accounts from score calculations, they’d have to create a new account designation to separate spousal AUs from third-party AUs, then verify the proper designation for each AU account.
I’m not sure what you mean here. If the spouse has never managed credit then their actual Real risk profile is just like any other thin files. Are you saying that by osmosis they must have absorbed any good credit behavior from their spouse?
At the same time, I’ve already agreed on au who is actually using the account over time. But it’s not really limited to spouse. Children also follow their parents’ tendencies.
[quote=“Bend3r, post:18, topic:2838”]
But it’s not really limited to spouse. Children also follow their parents’ tendencies.[/quote]
One of the tricky parts of this whole credit scoring business is figuring out which correlations are robust and causal enough to include a model.
For example, consider the correlation between moving violations and credit problems (which is well documented by car insurance companies and others.) Should that be incorporated into a FICO model? If the data bears out the correlation sure, it’s not clear why it shouldn’t be.
OTOH, suppose it were shown that racial classification correlates with debtors’ performance. Should that be incorporated into the model? I’d argue no. (That’s a complicated argument that we could take to another thread if there is sufficient interest, but OT here).
It doesnt matter if you can understand the concept or not, it’s pretty straightforward. It’s the whole reason AU accounts are reported in the first place - it’s required, for that very reason. I’m not sayin’ anything, it is what it is.