Monday, June 18, 2007

Credit Piggybacking

Today's Liz Pulliam Weston MSN Money article is a reminder that credit bureaus are closing the "authorized user" loophole, where the credit history of an account transfers to the authorized user's credit report. That's how I developed credit--I've been an authorized user on my dad's Visa since I was like 15. It's an old account with a high limit, and it was a big boost when I applied for credit on my own. Now I've got my own credit, so I don't mind that the information is going to disappear from my credit report--in fact, I'm glad, because my dad's become a little erratic with payment schedules (he's just retired, and he's not used to not having a secretary). I'll get the benefit of hanging onto the card (I hardly ever use it--only when buying groceries for my parents or airline tickets that they're buying me but that I need to schedule) but without the downside of a) taking a ding if my dad sends in a payment late, or b) having this huge line of credit on my report, upping my debt ratios.

On the other hand, this means that K needs to apply for a card in his own name right quick--we were doing a piggyback thing with one of my cards. The article reports that the new FICO formula will be introduced at one (to date, anonymous) bureau in September and rolled out at the other two over the course of the following year, so I'll just remind K to apply for a card in early August.

5 comments:

Sarah Hurst said...

Hey, I just wanted to say thanks for posting that info. I never even realized there was an authorized user loophole, but that definitely explains why my dad's credit card always appeared on my credit report. No doubt some of the low rates I received on my own cards in college were due to that history! I've sent an e-mail to all my married friends (with a link to your post) as an fyi. Thanks a ton!

elisa said...

To be an authorized user has both positives and negatives. For some people it is the only chance to use credit cards and they have to risk.

Wil said...

I think I'm a little confused. When I was in high school my parents added me to their credit cards and I think even their mortgage as a way to give me credit. Is there a difference between an authorized user and a co-credit..owner/user?

Patrick said...

I think that being an authorized user on your parent's credit card is the best and the safest way to establih credit history. I've been using my dad's and hope to get mine soon!

rama said...

Bill consolidation programs are another way for debt elimination help at your disposal. They are usually used to help you pay for medical bills, store credits and utility bills. A consolidation company negotiates with your creditors on your behalf to reduce your interest rates so as to help you pay your debt comfortably.