Ratios and Authorized User Accounts

[audiman]

Hello all, I recently pulled my report to see how realistic a good rate on a car loan is. I was surprised to see extremely high debt/credit ratios for my revolving CC accounts and was looking for insight.

I graduated from school about 6 months ago and my debts are as follows:

Student loans, 4k is owed, payments are still deferred.
1 CC in my name, Credit line = 2200 and Balance is about 1500.

Now the tricky part. My parents have a CC for which I am an "authorized user". Now my credit report does state that it is not an individual account and I am an authorized user. This card has no limit and is a charge card, paid in full monthly. At the time I pulled my report, my ratios for revolving credit accounts were over 600%, because they had a 10k balance at the time.

I feel it's unfair to report their balance on top of my total credit line. I always thought the card would help me because they always make the payments on time which shows on the report. What are my options? I would prefer not to cancel the card but I don't want their balance to interfere with my ratios. Advice?

[chane]

The balance will change from time to time depending on when the credit report is pulled and when the creditor reports it. For instance, if your parents pay it off, then it reports to the CRAs the next day, and you try to get a car loan that day, it would show $0.

Honestly, your ratios shouldn't matter that much. If your parents are willing to make you an authorized user on a no limit credit card, they should be willing to co-sign if you have any problems getting a loan. But, they are going to look more at your credit scores and income.

They will most likely understand that the credit card is your parents. It's weird that a no limit credit card is the best you can get, yet if it would actually show a number, it would be so much better for your ratios.

[audiman]

Thanks for the quick response. So my best bet is to apply for a car loan right after they've paid their bill? This makes no sense to me how they can put the authorized credit as $0 when it is unlimited.

I called Amex to ask about this, and they said that what gets reported to the primary users' credit will report exactly the same on mine, the authorized user. The confusing thing is, when you apply for a CC or auto loan online, most of the time the decision is made almost instantly. I don't see this process acknowledging the fact that the card is not primarily mine. I don't even use the card anymore but don't want to cancel it.

They will not cosign for me as I have had a few credit issues in the past, but luckily I have a high starting salary and minimal expenses for the time being. I am taking advantage of this situation to pay off all my debts, and save up for a deposit on a car until my score comes back up.

[chane]

Well, no it all depends on when the CRA collects the balance information. It's going to be hit or miss.

The place you are pulling your reports from might have it at $0, but surely FICO knows that it's infinite and can take that into consideration when calculating your scores. And surely a lender can see that...if not, I would absolutely get rid of it, because it's another huge flaw in FICOs scoring algorithm IF that is the case.

[audiman]

I called Amex, and they said that anybody pulling my report will see that and it shouldn't have a negative impact on lending decisions. This leads me into my next question(s).

I paid off an account in collections a few days ago. I only found out about it when I pulled my report 2 weeks ago, I never received a phone call or letter prior to seeing it on my report. I paid it in full (utility, they wouldn't settle) and zero balance letters have been sent out. I don't completely understand what happens now...The 3 CRA's will put on my file that the account has been paid, but if I want it removed should I send letters to all 3 CRA's begging for them to delete it?

[chane]

No, don't beg them to delete it. Demand that they do.

You should never pay on old collections until they agree to delete it (pay for delete). When you do, you give up your leverage and reset the clock. If they verify it, it will stay on for 7 years from the date they received the last payment (2 weeks ago). That has a huge negative impact on your credit scores.

[audiman]

So I should contact the collections agency to have it deleted? Or the CRA's themselves?

[chane]

Follow the directions here:

Basic Step by Step Beginner's Guide to Credit Repair