Authorized user abuse occurs when consumers ("landlords") rent their tradelines with extensive credit histories, high credit limits and solid repayment profiles to other consumers ("renters") seeking to inflate or boost their credit scores. For a fee, the landlord lists the renter on the landlord's tradelines—primarily on credit cards—as an authorized user, and the tradeline begins appearing on the renter's credit report. Renters then apply for new credit and may be approved when they do not really qualify, or they may qualify for pricing that does not accurately reflect their true credit risk. These transactions are usually enabled by third-party brokers who receive a substantial payment from the renter. The landlord receives a portion of this fee, which can be significant motivation to make one's tradelines available for rental.
The inclusion of authorized user trades in certain credit scores and underwriting policies has made it difficult for financial providers to accurately assess the creditworthiness of these renters and how such accounts may affect portfolio risk. As a result, credit boosting has impacted financial institutions in a variety of industries, contributing to increased delinquencies and defaults, unanticipated losses, understated loan loss reserves and inaccurate risk ratings for capital markets.
TransUnion worked with top mortgage lenders to analyze the impact of the authorized user dynamic on risk assessment and lending practices. We then developed a comprehensive suite of solutions that can help you better assess the risks this dynamic presents and make more informed lending decisions throughout your customer lifecycle. Our solutions include:
| Solution Name | Solution Overview |
| Authorized User Characteristics | A set of 23 characteristics describing various aspects of authorized usership on a given account are available for batch prescreen and portfolio review |
| Authorized User Alerts | Alerts that notify the lender when a large number and/or percentage of trades on a credit file have authorized user status
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| Authorized User Custom Analysis | Analysis identifies the segment(s) of high-risk consumers within a financial institution's portfolio who have demonstrated a significant, recent change in their credit profile due to the addition of authorized user accounts to their credit file. Also used to identify the optimal cut-off values of our custom credit characteristic set for use in batch prescreen and portfolio review |
| TransUnion Credit Scores | TransUnion-developed credit scoring models do not incorporate authorized user tradelines in their calculation of a score (i.e., VantageScoreSM, TransUnion New Account Model, TransUnion Bankruptcy Model, etc.) |
| Authorized User Landlord Identification Analysis | Enables financial institutions that report data to TransUnion to identify potential landlord accounts in their portfolio and help assess the possible reputation risk of “hosting” landlords |
