Ask Liz Weston » credit repair http://asklizweston.com Personal Finance Columnist Wed, 08 Feb 2012 20:27:08 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Adding fiance as “authorized user” may help his scores, but be careful http://asklizweston.com/2009/07/27/adding-fiance-as-authorized-user-may-help-his-scores-but-be-careful/ http://asklizweston.com/2009/07/27/adding-fiance-as-authorized-user-may-help-his-scores-but-be-careful/#comments Mon, 27 Jul 2009 21:30:38 +0000 lizweston http://asklizweston.com/?p=1286 Dear Liz: My fiance and I are trying to secure financing for our first home, but his credit scores are just below the mark. I was thinking of adding his name to my credit card account so that my available credit line shows up on his report. Would this boost his scores at all? Is there any danger of it lowering his scores?

Answer: If you have a good history with this account — you always pay on time and you’re not carrying a large balance — adding him as an authorized user may help his scores.

The key is whether the credit card issuer will “export” this data from your credit file to his. Some issuers automatically do this export for any authorized user; others do so only for spouses. The only way to know for sure is to ask your credit card company.

If the data is exported to his file, it will be used to calculate his FICO scores, which are the scores most lenders use. The company that creates the FICO briefly toyed with the idea of excluding authorized user data in its latest formula, FICO 08, but ultimately decided to continue using it.

If you add him as an authorized user, you don’t need to give him a card or access to your account. What you should do, however, is take some time to go over his credit reports and discuss what steps he’s taking on his own to clean up his financial act.

A temporary boost in his scores might land you a mortgage, but you could wind up much worse off financially if he continues to mishandle his credit.

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My regular appearances on a local radio show, KNX’s “Money 101″ with Bob McCormick, tend to generate a fair amount of emails. (I’ll be back on Tuesday July 9 at 11 a.m., if you’re in LA or want to listen via its Web site.) Bob forwarded me a plea for help from a listener named Veronica, who said “Help! I have had horrible credit for over 20 years and want to clean it up to buy a house…What should I do? Are there any companies that can help me?”

I wish there were a raft of solid, reputable companies that could help you burnish your credit, but there aren’t. This is an area with a lot of fraud and false promises. That’s one of the reasons why I usually urge people at least start the process of cleaning up their credit reports themselves. If you run into a problematic creditor or collector that insists on reporting errors, you can hire an attorney familiar with fair credit and debt collection laws (www.naca.net offers referrals).

You also have to make sure your finances are on a sound footing. All the credit repair in the world won’t help if you keep paying bills late or regularly max out your credit cards. Once you’re living within your means and have at least a token amount saved (one week’s pay or $1,000, whichever is less), you can start the credit repair process:

  • You begin by getting your three credit bureau reports from www.annualcreditreport.com and challenging any serious errors or negative marks older than 7 years.
  • You obtain and use credit cards, never charging more than 30% of your credit limits and paying the bills in full each month
  • You consider getting an installment loan (a personal or auto loan) and paying it off on time.

Improvements take time, so you’d be smart to start this process at least a year in advance.

I outline the path to better credit in my book, “Your Credit Score,” which was recently published in a second edition. You can find it on Amazon or at your local library. The chapters on improving your score, coping with a credit crisis and rebuilding your credit will be the most relevant. Good luck!

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