The 2007 recession created the housing crisis, historical levels of unemployment, and the stock-market crash on Wall Street. On Main Street, most people could not even relate to the financial complexities that caused theGreat Recession. Nor could they understand concepts like the Troubled Asset Recovery Program (TARP), or the National Economic Stabilization Act. What lower middle-class, hardworking person has ever to deal with the idea of 700 billion dollars? I don’t think I have eversaid
the words themselves more than a few times in my entire life! But even if we could not relate to such concepts, we could relate to not being able to pay our mortgage, or our car payment. For most people, losing a job usually has catastrophic effects upon their lives.
The results of loss of employment can be quite severe; losing your home, losing your car, drastic change in lifestyle. The material things can be replaced over a relatively short time period once a person finds work. However, what cannot be remedied in the short-term by finding work is the damage done to a person’s credit rating. Once that damage is done, it can take years and years of work to regain one’s previous credit standing. And there are no guarantees that a person won’t encounter difficulties repairing their credit as they will have to deal with dishonest, deceitful collection agencies, greedy original creditors, and of course, “the big three” credit reporting agencies –Equifax,Experian, andTransUnion. We all know it’s a lot easier to lower yourFICO score
than it is to raise it.
From a socio-economic perspective, it seems quite unfair that wrong-headed politics can drive the world’s strongest economy into the worst recession since the Great Depression, cause hundreds of thousands to lose their jobs, then hold them individually responsible for repairing their own credit when they weren’t responsible for what caused their credit score to tank in the first place.
If you are one of the many people who need to improve their credit score or repair their already bad credit, tapping seasoned trade lines is one of the strategies available in the market. Seasoned trade lines are typically revolving lines of credit that have been aged for at least a few years. The age of the trade lines make available a history of on time payments. In addition, seasoned trade lines usually have high limits and low balances. This, debt to credit ratio assists in positively impacting a consumer’s credit score by either expanding the young credit file or lowering the debt to credit ratio previously establish on the report. Historically, businesses investors conducted this practice to improve their credit scores. Now this tool is available to the public.
Using seasoned trade lines to boost credit scores is somewhat controversial. Although financial experts consider it technically legal, some financial experts consider this instrument – when used as a credit repair method – very unethical. Recently, several cities across United States and theFederal Trade Commission
have scrutinized this unconventional method, but all conclude that it is legal. A Representative of theFair Issac
Corporation – the company that created the FICOcredit scoring
system, said at a Congressional hearing that they recognize AuthorizedUser Accounts
as legitimate. The value of utilizing AU accounts or seasoned trade lines is that they produce very fast results. Following the normal procedures, it would take the average person at least 3 to 5 years to significantly improve their FICO score. This is because trade lines have to “mature” to add points to your credit score. It is also important to add differenttypesof credit to your file; revolving accounts such as credit cards, installment accounts such as payments that do not change every month like a car, or a bedroom set. Trade lines can be purchased for each of those types of accounts. Rebuilding your credit is a very slow process, especially if you start with a score somewhere in the 500â€²s. Purchasing a trade line will cost you some money, but the pay-off is more than worth the price. Whatever the reason you would consider buying aseasoned trade line make sure you check out the company thoroughly, and do your due diligence!
Here’s exactly how trade lines work:
Adding a seasoned trade line with a significant limit, low balance, and lots of history will certainly help any credit score. However, the question is… based on the particulars of a givencredit report, to what extent will the seasoned trade line help? If your credit report shows a significant number of derogatory items such as charge-offs, collection accounts, late payments, etc., the impact of the season trade line will be less than in the case of the credit file with relatively no history (and especially limited or no negative history). The number, history and status of these credit trade lines comprise a large part of a person’s credit score.
Credit bureaus such as Experian, TransUnion, and Equifax look at the amount of open trade lines, the payment history on the accounts, how long the account has been open and how long since the last activity on an account to determine an individual’s credit score. To build positive credit history a person generally should strive to have approximately 3-5 active trade lines that are “seasoned,” meaning the accounts have been open for around 2 years, have positive payment history on all accounts and the accounts should be current and in good standing.
Lines of credit that are in the name of the primary account user are called primary trade lines. For example, if Borrower A opens a credit card in his name, Borrower A is considered the primary account user and the credit card account is considered a primary trade line. If Borrower A added Borrower B onto the credit card account as an authorized user, Borrower B would be considered a secondary account user and this would be considered a secondary trade line for Borrower B. Authorized users on accounts are generally not responsible for re-paying any debt incurred on the account as the primary and/or joint account holder would.
Trade lines have a significant impact on a consumers FICO score. For that reason, businesses that sell access to seasoned trade lines to customers who are looking to improve their credit score have increased dramatically in recent years. These businesses find and pay people with good credit who are willing to add other authorized users onto their seasoned and positive credit accounts. Customers looking to build their credit pay these businesses for the ability to be added as secondary authorized users on these established accounts. This practice is often known as “piggybacking.”
In theory, the positive history of these trade lines help increase the credit score of the borrower with negative credit history, since these trade lines are reflected on both the credit history of the primary holder and on the secondary holder as well. This was generally done with parents adding their children as secondary users on their accounts to help their children build credit. However the practice of selling seasoned trade lines, while legal, is considered controversial and can be a risky endeavor
This method is plagued by legal controversies. Privacy laws and the Fair Credit Reporting Act make it impossible for lenders to identify whether a user is related to the primary account holder or not. Financial experts admit this is technically legal but can be used “unethically”. Credit score companies are taking some steps to halt the growing usage of this method. In fact, Fair Isaac Corporation temporarily changed their scoring algorithm to effectively stop considering “authorized users” in their FICO scoring model, but because of the privacy protection language of the Equal Credit Opportunity Act, they reversed their decision and currently acknowledge authorized users as legitimate.
WHAT THE FTC SAYS:
FTC spokesman Frank Dorman said: “What I’ve gathered from attorneys here is that it is legal, however, the agency is not saying that it is legal technically.” Other law enforcement agencies, like the Florida Attorney General’s Office, are reviewing whether such activities are legal. A report published by theFederal Reserve Board
reported “This is possible because creditors generally have followed a practice of furnishing to credit bureaus information about all authorized users, whether or not the authorized user is a spouse, without indicating which authorized users are spouses and which are not. This practice does not violate Reg. B.” In a written statement from Fair Isaac Corporation on credit scoring models and credit score before the U.S. House of Representatives Committee on Financial Services, Subcommittee on Oversight and Investigations, Tom Quinn, Vice President of Global Scoring Solutions for Fair Isaac Corporation, stated: “After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user trade lines present on the credit report…”
What’s in it for people with good credit? They are paid $100 to $150 for every account they authorize as primary accounts to another user. Some seasoned trade line companies lure many people with good credit by promising that they can earn more than $3,000 per month without doing anything. This method has existed for many years but did not gain much popularity until now. Most of the time it is used by students who piggyback with their parent’s credit cards. The subject of controversy is whether it is unethical to let other people use your good credit so they can convince lending companies to approve their loans or mortgages. A simple Internet search will reveal numerous online business people like Jason Williams of Affiliate Information Technology (313)460-1660 who manages over tradelines for websites likewww.legalcpn.com, offering this service to the public. While there are some legit seasoned trade lines groups, the number of scammers is significantly growing. One common aspect among the less legitimate companies is the promise to improve credit scores literally overnight. If you are seriously considering purchasing a trade line to increase your credit score, you definitely want to go tohttps://www.ripoffreport.com/
and do simple search for the name of the company selling the trade line as well as the name of the owner of the company. If the company is listed there they are most likely a scam. Also check with the Better Business Bureau in the city where the business is located. Even calling the consumer protection division of that state’s Attorney General’s Office to inquire about complaints lodged against the company wouldn’t hurt either. Trade lines are relatively expensive to purchase – up to several thousand dollars so you want make sure you are dealing with a reputable company.
It is understandable why many people with low credit scores decide to purchase seasoned trade lines and pay fees ranging from $700 to $5000; A good credit score can literally change your life. It can lower your interest rates, allow you to buy a new home, get better insurance, or take the vacation of your dreams. It can also help you attain a high-paying job that requires a good credit rating. On the side of cardholders with good credit reputation, there is no risk involved in putting their good credit “up for sale” because the authorized user does not have access to the credit card, or the cards’ account number.