Effective credit repair requires an understanding of the inner workings of the credit scoring model. The credit scores used by lenders are called FICO scores. FICO is an acronym for Fair Isaac Corp, the company behind the creation and maintenance of this all-important credit evaluation algorithm.
The Purpose of Credit Scores
The purpose of credit scoring is to provide lenders with a way of measuring the risk they will incur when lending you money. The exact mechanism of the FICO scoring model is not made public, but the behavior of the model can be understood by observation and experience. A credit repair professional, by virtue of daily practice, should be able to quickly and accurately determine score optimization opportunities for his or her customers.
Fair Isaac Corp is far more than just the creator of the FICO model; they also conduct extensive ongoing research to keep their software as responsive to changes in consumer behavior as possible. Hence the FICO model is updated on a regular basis. Sometimes the updates are minor, sometimes there are significant changes designed to respond to important issues.
The Big Authorized User Issue
The major change in the FICO 08 release of the software was designed to respond to abusive practices by gray-market credit repair businesses that were selling authorized user credit card accounts. This practice was clearly intended to manipulate the credit scores of the purchasers. In response to concerns voiced by lenders, and in order to maintain the integrity of credit scores, Fair Isaac implemented a method of blocking the benefit that came from brokered authorized user accounts.
Legitimate Users are Safe
The elimination of authorized user benefits was a very sensitive issue given the number of legitimate family member accounts that might have been affected by a complete software block. To the great credit of Fair Isaac they managed to modify the software to sift out the abuse and still allow the score benefit to pass through to legitimate family members.
As credit repair professionals we believe that it is appropriate for our credit repair customers who have sincerely decided to turn their life around to ask a willing family member to add them as an authorized user to an established credit card. The credit score benefit will accrue to the recipient and support their efforts. Used properly, authorized user accounts are still a great credit repair tool!