Seasoned credit trade lines and you
When your credit scores don’t qualify you for the home mortgage you want, where do you turn?
That’s an especially timely question, as banks and mortgage companies tighten underwriting standards for applicants with less than perfect credit.
But federal and state authorities fear that some borrowers are turning to a fast-growing business on the Internet: companies that claim to boost credit scores by transplanting the credit DNA of people with excellent payment histories into the credit files of people with subpar histories — ostensibly without breaking any law.
The companies claim to raise FICO credit scores by 50 to 250 points or more by adding low-scoring borrowers as “authorized users” onto the credit-card accounts of people with FICO scores well in excess of 700.
The positive payment information from such cardholders then flows into the files of the persons with subpar credit.
Federal law permits authorized users to be added to credit-card accounts.
Typically, the users are relatives or friends of the primary cardholder.
For example, a parent might add a son or daughter onto a Visa card to provide access to credit for the child or for use in emergencies.
Federal law, however, does not limit the number or prescribe the type of authorized users permitted on any single account.
Exploiting that loophole, numerous companies have popped up on the Internet offering to buy and rent out the credit-card “trade lines” or accounts of credit-card holders with high limits combined with perfect payment histories.
Big bucks — and a strong potential for fraud on mortgage applications — are involved.
Some Web-site promoters say they can add 80 to 120 authorized users onto a high-quality credit-card account before banks or lenders get suspicious.
Each account can rent for as much as $1,500 to $2,000 for a 180-day usage.
Commentary:
Using credit trade lines is a legal way to boost your credit score at a pretty steep cost. But, if you use it to qualify for a lower mortgage interest rate, you could save thousands over 30 years. It may be worth it.
-Adam
Credit-score “transplants” can create monster mess (Seattle Times)
When your credit scores don’t qualify you for the home mortgage you want, where do you turn? That’s an especially timely…
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