Credit went from Nil to Excellent... can this be real?

Question

Hi all, I just want a sanity check from the BP folks here.

I just asked my dad to add me as an authorized user to one of his credit accounts in the US to help me rebuild my credit scores there (since I closed all my accounts 10 years ago when I moved overseas).  I just created an account with Credit Karma so I can keep an eye on my score's growth as I take additional steps to improve it.  But already I see it has gone from nothing to excellent with the addition of my father's credit account history!

My question is, is this real or some artifact of the algorithm Credit Karma use to compute the scores?  How accurate are Credit Karma results?

Sounds too good to be true...

Lance Luvaul · Answer

Quick question: won't lenders be aware of this trick?  Is there a way for them to tell this is the "authorized user" trick and discount its use, or re-compute a "better" score with data excluding the account "authorized user" account?  For example, Credit Karma shows my father's account as Responsibility = "Authorized User", whereas on my old closed accounts it shows Responsibility = "Individual"

Chris Mason · Answer

Just last month I had someone go from "Insufficient data, no FICO score" to >800 in a month. It does happen.

It's important to note that "no FICO score" is NOT the same as "bad credit."

It's like dividing by zero. The answer isn't infinity or potato or anything, it's simply "not applicable." And then you tweak one little thing so you're not dividing by zero, and poof the formula spits out a real number that you might not have expected.

Lance Luvaul · Answer

Just wanted to report that my credit application was accepted!  Just waiting on the card in the mail now.  My first credit card in the US in 10 years... I'm finally on my way to building my credit profile back up!  I'll be adding another credit line here in a month or two when I ask AMEX to transfer my acct from Australia to the US (they have a service where they use your credit in a foreign country to help your application in the US).

Just wanted to thank all those who helped me by replying to my original post :)

Account Closed · Answer

Credit Karma is total junk. Since you are starting with a basically clean slate, don't make the mistake of starting out with store cards or cards that are marketed to those with poor credit. Discover likes thin files and may start you with a limit of a few thousand. Capital One is also friendly to thin files. Cards like Citi and Chase are very difficult with a thin file. Too many inquiries in a short period of time or new accounts can tank your score. Choose wisely what cards you apply for and have a plan. You need a minimum of three open credit lines to maximize your Fico score.

Lance Luvaul · Answer

Thanks @Dan Mahoney, that's a good tip about the recon line!  I'll give that a try (if I'm rejected), thanks.

Mark Webb · Answer

You can think of credit karma much like you would Zillow. its not the most accurate information, so kinda how Zillow can be off $100,000 on a property value. credit karma can be off more than 100 points  on credit score. . .its a automated algorithm system used to gather leads

Michael Cohen · Answer

I would like to chime in: there is no single "FICO" score. Each of the three major credit bureaus (TransUnion, Equifax, and Experian) have multiple algorithms that analyze a credit profile and then assign a numerical value. According to Bankrate:

Currently, Experian and Equifax each provide 16 different FICO credit scores to lenders: five iterations of the general risk score and up to three generations of the five industry scores. TransUnion provides 21 different FICO credit scores to lenders, six versions of the general score and up to four generations of the industry scores.

Some older FICO scores are available only to lenders who have an existing relationship with the credit bureau. New clients (lenders) aren't offered the oldest scores.

This brings the final tally to 53 FICO credit scores. However, FICO 9 will eventually add 12 more scores to the count: a new general risk score per bureau plus a new mortgage, auto and credit card industry score for each.

So anything you check (Credit Karma, Discover, FreeAnnualCreditReport.org, etc.) should be used as a guide only and not as absolute gospel as to what your "credit score" will be with your lender.

Daren H. · Answer

This happened to my wife by accident. Her credit was jammed up from a divorce years before me. I had excellent credit, a high limit card, used it for all expenses, paid balance in full each month. After we got married and had our first kid, I added her as an authorized user because she handled all of the grocery shopping and kid stuff. I knew her credit was jacked from old collections. I never thought anything about her being an authorized user affecting her credit. At some point we checked her credit and it had sky rocketed from 580s to 700s. I then learned about getting things removed if creditors cannot verify debt and did that. Her credit is night and day. I kid her that she should pay me for reviving her credit. She said I should pay her for making me a good human being, lol. I was a selfish, single hot mess before her, lol.

Dan Mahoney · Answer

@Lance Luvaul The first screening for credit cards is usually automated.  When you apply for a card you can get instant approval if you meet the criteria.  If you do not get instant approval, it's often because your application has been flagged for a manual review.  Even in that case, I don't think the distinction between individual and AU tradelines is going to matter much.  I don't think it will matter much for conventional mortgages either.

Good luck with the application!  If you don't get instant approval, google "recon line" or "reconsideration line" for your card issuer and call to check status.  You can sometimes convert a rejection into an approval if you clear up their concerns over the phone.

Lance Luvaul · Answer

Spot on @Dan Mahoney about my dad's account.  And as you and @Monolo D. both think card application approvals are automated and don't distinguish between Individual and Authorized User accounts, I'm going to give it a try and apply for a new card now.  I'm only trying to further improve my scores at this point, but eventually I will apply for a mortgage, and I think @Monolo D. is right again that an actual person will look at my record when that time comes.  But by then I should have enough real credit accounts that the one Authorized User account won't matter too much.  Thanks again everyone!  Good luck to all :)

Credit went from Nil to Excellent... can this be real?

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