Tuesday, June 5, 2007

Improve your credit score the easy way: Rent Better Credit

I heard something about this last year, but either it wasn't explained to me very well or I just flat out didn't believe it. Today there was an article on discussing it in detail, and there is actually some argument about whether or not it's legal.

Here's the quick version. Your credit score isn't good enough to qualify you for the loan you want, so you contact a "credit broker", who adds you as an authorized user to someone else's account who has excellent credit. Next month when the creditor updates their activity to the credit reporting agencies, your credit score jumps by 30 points or more, simple as that. Need to raise it higher, just get added to more accounts. The article cites people whose scores have risen by over 100 points – enough to make a marginal credit risk into a blue chip, best-interest-rate-available customer!

The argument for this being legal is that people are allowed to add anyone to their account at anytime; there's no rule saying an authorized user has to be related to the account holder. And since everyone is playing within the rules set up by the credit card companies and the credit reporting agencies, how can it be wrong?

The truth is different – in my opinion this is out and out fraud! Authorized User means a user of your account AUTHORIZED TO USE YOUR ACCOUNT. Where's the gray area? The people renting their credit are NOT allowing the other party to access their account, or to make purchases, or anything else. They don't even know each other. The people paying to get added to someone else's account in a false manner are actually withholding information their lender should know.

If it walks like a duck, and it talks like a duck...

- Chris Butterworth