DALLAS -- Credit bureaus are expected to adopt a new version of the widely used FICO credit score this year that will no longer benefit so-called "authorized users" on another person's credit card account.
It's common for parents to add a child as an authorized user on their credit card to boost the child's credit score. That benefit would no longer exist under a new scoring model by Fair Isaac Corp., the company that developed the FICO score.
You can still be an authorized user, but Fair Isaac will no longer factor authorized-user accounts into its credit-scoring formulas.
The move is in response to the controversial practice of "piggybacking," in which some Web sites allow consumers with poor credit scores to hitch on to someone else's good credit record.
These companies say they can boost your credit score by having you added as an authorized user on the credit cards of strangers with stellar credit, for a fee. This raises your credit score.
The strangers get paid based on the quality of their credit, with the promise that the new authorized users won't actually be able to buy anything on their cards or even get any of their personal information.
Lenders and Fair Isaac officials decry the practice, saying it damages the integrity of credit scores.
"We will do whatever it takes to protect the reliability and accuracy of FICO credit scores for lenders, and to ensure lenders can continue to use FICO scores with confidence when making their most important customer decisions," announced Fair Isaac CEO Mark Greene in June.
"We will continue working with lenders, regulators and others in the credit reporting industry to end deceptive practices that fraudulently misrepresent consumer credit histories for profit."
He made the announcement a month after Fair Isaac said it was updating its FICO scoring model that will "significantly enhance its predictive power."
Called FICO 08, the new formula also will be more forgiving of occasional slips by consumers but will take a harder line on those who repeatedly are late on their bills. The FICO score ranges from 300 to 850.
Here's an example from Craig Watts, Fair Isaac spokesman:
Bill and Tom each have 10 open credit accounts on their individual credit reports.
Bill's report shows that he was seriously delinquent on one account several years ago, but all his other accounts are in good standing, and his credit card accounts show low balances.
