There is a way you can accelerate your credit repair efforts during a bad credit auto loan
What we’ve seen
Buyers with poor credit often ask us if there is anything other than a bad credit car loan that can raise their credit scores.
The fact is we do know the answer because for almost two decades we’ve been engaged in bad credit auto sales here at Auto Credit Express.
It’s also why we put together a web site showing why a tote the note loan won’t promote your credit scores and clarifying the terrible credit auto loans process while pointing out the problems that can lead to repossession.
Becoming an authorized user
An authorized user is an individual other than the actual account holder that can be added to a credit card account in a perfectly legal practice known as “piggybacking.”
If you have bad credit, becoming an authorized user with someone with a high credit score, low card balance and high credit limit, can improve your FICO scores in a couple of ways.
To begin with, the additional positive credit activity will begin appearing on your credit report, making a positive impact on your credit scores.
Further, this new credit line will increase your available credit and, at the same time, lower your debt ratio. This further raises your credit scores.
How it’s done
Companies that specialize in credit repair routinely solicit credit card account holders with high credit scores, offering to pay them for permission to add authorized users to their accounts. The company then assigns a client to one or more these accounts in order to raise that client’s credit scores.
As an authorized user, these clients are unable to use these accounts or gain access to any personal or financial information these accounts contain. But by being on the account, these clients can take advantage of the payment history on the account and improve their credit scores.
Credit bureaus respond
This practice eventually attracted the attention of FICO and the three credit bureaus, resulting in a new scoring model termed “FICO 08”. This model was designed to ignore authorized user accounts when calculating credit scores.
But there was a problem. According to FICO, they were informed by the government that ignoring authorized users would obstruct the company’s compliance with Federal Reserve Regulation B – a regulation that requires lenders to consider the shared accounts of spouses when determining a married person’s credit risk. If the new model ignored these accounts, it would be in violation of regulation B.
According to FICO it has since adjusted the formula to include authorized users while reducing the impact of piggybacking. So as it stands, authorized users are still a part of FICO 08.
Issues with piggybacking
There is a possible downside to becoming an authorized user. If the account holder continues to pay like clockwork, your credit scores will continue to reflect this positive activity. But if, for some reason, the account holder is either late or misses one or more payments, your own credit scores could also drop.
The Bottom Line
You need to decide for yourself how to approach repairing your credit and improving your FICO scores. If you decide to become an authorized user, you need to make sure that you can handle the possible downside if the payment habits of the account holder should change.
If you decide it’s time to establish your car credit, Auto Credit Express specializes in helping people with bad credit find a dealer for their best chance at getting approved for a bad credit car.
So if you’re serious about getting your car credit back on track, you can begin right now by filling out our online auto loans application.
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