Is This the End of Credit Score Piggybacking?

You may be familiar with the credit improvement trick of piggy-backing on someone else’s good credit to improve low Fico scores. Usually this is done to build scores for a son or daughter with no credit or to rebuild credit for someone who has had problems.

I feel dumb for being even a little surprised that there are on-line businesses encouraging and facilitating the use of this tactic—and worse—between complete strangers to game credit scores and defraud lenders. See the Mortgage Fraud Blog’s post for a good analysis of the problem.

Here’s another article I saw today, apparently one of many that appeared last weekend on this topic. The bottom line is that this tool is about to be shut down because of abuse. Don’t blame the mortgage industry for this one. It’s like drugs. The fundamental problem is demand.

Regulators Seek End to Shady Credit Score Sites

Mortgage industry regulators are trying to crack down on Web sites that offer consumers a fast way to boost their credit scores and look a lot more appealing on loan applications. These sites promise to connect a home shopper’s credit history to a stranger’s credit card or provide pay stubs from bogus companies. One even offers consumers the opportunity to rent a well-stocked bank account for a month.

“We think these types of Web sites are increasing,’ says Frank McKenna, chief fraud strategist at BasePoint Analytics, which helps banks and mortgage lenders identify fraudulent transactions.The operators of these sites are hard to track down because the y shut down and disappear when investigators come calling. These sites also are hard to police because it is unclear which laws, if any, the they’re breaking, says McKenna.

The repercussions for the consumers are clear, as it’s illegal to lie on a form, but there aren’t laws that specifically prohibit what the Web sites are doing. One site, RaiseCreditScoreNow.com offers to add a person to four separate $20,000 credit lines with 10 years of perfect pays for $4,000. The site says that doing so could increase an individual’s credit score by 200 points in 90 days. Another company, SeasonedTradeLines.com, says it has an inventory of 100 real, verifiable credit card accounts with perfect payment histories dating back to 1974. Fair Isaac Corp., which developed FICO credit scores, says it is trying to shut down this practice, which it calls piggy-backing.

Got a question or concern? Need help with a loan? Email me. I can do loans in the most of the Western U.S.

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