Piggy Backing Credit Ratings
Read about a little known loophole in the FICO scoring system which allows instant increases to credit scores of 200 points and more!
Increase Your FICO Score Overnight
Borrowers are taking advantage of an obscure loophole in the credit ratings system
Individuals with low credit scores are able to short-cut the credit rebuilding process, which can take several years, by growing practice known as piggybacking. Basically under this practice someone with poor credit can be added on as an authorized user on a credit card owned by someone with excellent credit. It is essentially the same thing as when parents add their children to their credit cards in order to help them establish credit.
For around two-thousand dollars it is possible to "rent" credit card slots on three credit card accounts with top credit scores. The improvement to the renters credit score can be impressive. The actual improvement will vary, depending on what else is in the customer's credit portfolio but typical improvements are 30 to 45 points on one borrowed credit card account, 60 to 90 points on two, and 100 to 200 points for five rented accounts.
The process works because when the computers see the new accounts that have been added to the person's records it factors in the payment history, which is always excellent, of the rented accounts. This then raises the credit scores accordingly.
Fair Isaac Corporation is the developer of the FICO scoring system. They claim the they will change the way it calculates credit scores later this year. They assert that the new formula will close this obscure loophole.
The mortgage loan industry is in a quiet uproar over the growing practice. Which is understandable. From their perspective, they are awarding mortgage loans to borrowers with highly inflated credit ratings. Not only do mortgage lenders award loans to borrowers they would ordinarily reject due to a high risk evaluation but the interest rates that these loans are established with are much lower than they would be, due to the fact that interest rates are proportionally tied to the borrower's credit score. This translates to enormous savings to the borrower at the expense of the lender.
Authorities have not made a final judgement, yet, on the legality of this practice, so for the time being there is a fast track to credit repair that would-be borrowers can utilize. Although they have not disclosed the details, it is understood that the mortgage industry are developing various strategies to combat credit card piggybacking. It is thought that by 2008 this shortcut will be all but nullified.
For around two-thousand dollars it is possible to "rent" credit card slots on three credit card accounts with top credit scores. The improvement to the renters credit score can be impressive. The actual improvement will vary, depending on what else is in the customer's credit portfolio but typical improvements are 30 to 45 points on one borrowed credit card account, 60 to 90 points on two, and 100 to 200 points for five rented accounts.
The process works because when the computers see the new accounts that have been added to the person's records it factors in the payment history, which is always excellent, of the rented accounts. This then raises the credit scores accordingly.
Fair Isaac Corporation is the developer of the FICO scoring system. They claim the they will change the way it calculates credit scores later this year. They assert that the new formula will close this obscure loophole.
The mortgage loan industry is in a quiet uproar over the growing practice. Which is understandable. From their perspective, they are awarding mortgage loans to borrowers with highly inflated credit ratings. Not only do mortgage lenders award loans to borrowers they would ordinarily reject due to a high risk evaluation but the interest rates that these loans are established with are much lower than they would be, due to the fact that interest rates are proportionally tied to the borrower's credit score. This translates to enormous savings to the borrower at the expense of the lender.
Authorities have not made a final judgement, yet, on the legality of this practice, so for the time being there is a fast track to credit repair that would-be borrowers can utilize. Although they have not disclosed the details, it is understood that the mortgage industry are developing various strategies to combat credit card piggybacking. It is thought that by 2008 this shortcut will be all but nullified.
Credit Repair Links
- Dealing With Credit Bureuas
- A useful and informative article on how to deal with credit bureaus and use them to your advantage
- Credit RX blog
- Very Informative Blog, many articles and links to useful resources.
- FICO Scores Finally Explained
- FICO scores explained. This information can save you Hundreds of Dollars!
Boost Your FICO Score Overnight
Loophole in FICO Scoring System Allows Borrowers to Inflate Their Credit Score
A little known loophole in the credit rating system used by FICO allows people to increse their credit score by hundreds of points overnight.
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