Do you realize that in our country you are penalized for
practicing good money management habits? Think about it.
If you paid for your own college education and refused to
fall into the credit card trap that uses lenders to
purposely suck the financial life out of naïve students,
you might graduate debt free and have no credit history.
When you want to buy a vehicle on credit or a home with a
mortgage, you could not get a loan without a credit
repayment history and a decent FICO credit score.
For years young adults with no credit history, limited
credit history or blemished credit history have worked
around the problem by having someone with good
credit-usually a parent, spouse or good friend-added as an
authorized user to their credit card.
Once the authorized user is added, his or her credit card
payment history is added to the account, giving the
original card holder a higher credit score and access to
loans and better loan terms.
All of this is about to end as Fair Isaac (the developer of
the FICO credit score) will create a new scoring formula to
eliminate the authorized user tactic. Learn what you can do
to protect yourself.
Fair Isaac is taking the action because it estimates that
30% of the 165 million consumers with credit cards have
authorized users on their accounts.
Once the new system is implemented in mid-2008, millions of
authorized users will see their credit scores decline or go
into free fall. Authorized users with no credit history of
their own will see their credit scores disappear. Those
hurt the most may be young adults and married women.
Here are some tactics these two population groups can use
to fight back:
1) If married and listed on your spouse's account apply for
a credit card in your own name.
2) Apply for a revolving credit card from a department
store or other retailer as they are easier to get because
they generally have lower credit limits and higher interest
rates.
3) Apply for a secured credit card because you put money
into an account in advance to cover your card transactions.
If you default on your payment, the lender debits your
account to cover the payment.
Sometimes secured credit cards become unsecured credit
cards when you pay timely over a period of time. In some
cases, you may even get back the initial deposit in the
secured account plus interest.
4) Try to keep your balance below 30% of your available
credit as this credit utilization will improve your credit
score.
You can research fees and other features of credit cards at
(Note: This is the last of a 3-Part Series.)
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Ed Bagley's Blog Publishes Original Articles on Current and
Past Events with Analysis and Commentary on Movie Reviews,
Sports, Lessons in Life, News and Comment, Jobs and Careers
and Internet Marketing intended to Delight, Inform, Educate
and Motivate You the Reader. Find Ed's Blog at:
http://www.edbagleyblog.com
http://www.edbagleyblog.com/MovieReviewArticles.html
http://www.edbagleyblog.com/LessonsinLifeArticles.html
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