The Credit Score Black Market: Buying and Selling Trade Lines

black market

You may have heard about companies that sell the credit history of others to consumers who have poor or limited credit. It’s referred to as “buying credit”, “renting credit”, or “adding seasoned tradelines”.

These credit brokers target real estate professionals who desperately need to find qualified homebuyers, especially in today’s market where heightened credit standards are making home financing increasingly difficult.

The way it works is rather simple.

Credit brokers essentially connect people with good to great credit who are willing to add authorized users to their credit cards and other financial accounts to people who lack credit history.

The credit brokers offer “seasoned tradelines” to people in need of credit for a premium, often hundreds of dollars to be added as an authorized user to a single credit card.

The price varies based on the length of time the account has been opened, as well as the amount of the credit line in question, and the account type.

For example, if a person who lacks credit history wants to be added to a credit card with a 30 year history and a $50,000 credit limit, they can expect to pay $500 or more.

These companies also offer limited history tradelines for as low as $200, but those accounts are typically only opened for less than a year, with credit lines as low as $1,000.

But note that most mortgage lenders and banks want to see at least three open and active tradelines with a minimum two-year history.

So how much do seasoned tradelines help your credit score?

The answer isn’t necessarily simple, as the strength of tradelines differ widely based on the length of the time the account has been open, the activity on the account, the credit line on the account, and the type of the account.

And what about the legality of it all, and the risk?

Adding authorized users to credit cards and other accounts is perfectly legally, even if the person is unrelated. Even before it became a business, parents were doing it with their kids and family members were co-signing on accounts for the sole reason of boosting credit history and Fico scores.

But is it safe to add authorized users to credit cards and other financial accounts? Do you really want others to have your account numbers and legal access to make transactions using your credit cards?

Granted they probably won’t get their hands on your credit card, nor will they be able to order one without your permission, but the risk for identity theft and other scams is amplified.

After some consideration, it would appear that the risk clearly outweighs the reward for both parties involved. Even if there is no foul play, the original account holder could default on a payment on your purchased tradeline and drive your credit score lower than where it originally stood.

And who’s to say the addition of seasoned tradelines will actually help you get that loan you want?

Banks and lenders aren’t stupid. They can, and will dig deeply into your credit report to analyze your accounts.

If they find multiple accounts with co-signers with unrelated names they may question their validity and still decline your loan or credit card application.

Remember, credit score is just one piece of the credit pie. It also what’s behind the credit score, and whether it’s commensurate with your income, occupation, and assets.

Just because you have a high credit score doesn’t mean you’ll get approved for an auto lease or a mortgage.

It’s best to improve your credit naturally over time, the honest and free way. You’ll see better results that stick. How to raise your credit score.

Either way, the FTC is already moving to prevent these companies from staying in business, so that should make the decision to use these services a whole lot easier.

(photo: jbdodane)

By Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.

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