seasoned trademark is a line of credit that the borrower has held in good standing for a long period of time, typically at least 2 years. The “seasoned” part simply implies that the account is aged or that it has an established history.

“Piggybacking” tradelines

“Piggybacking” tradelines are a practice involving seasoned tradelines, sometimes referred to as ” piggybacking ,” which uses creditworthy borrowers to improve the credit rating of an unrelated third party.

The creditworthy borrower adds the third party as an authorized user of his lines of credit, but does not actually provide the third party with the materials (credit cards, account numbers, etc.) that would allow the third party to make charges against that account.

The benefit to the third party is an improvement in their personal credit rating-their credit score increases. However, this does not change their entire credit record, but merely increases their credit score as a result of the newly added tradeline. This may be the third party, but it’s a good credit. However, one aspect of the lending process; That is, the borrower must pass all underwriting procedures, which include much more than the credit scores of the borrower.

Opponents’ views

Those who oppose the concept of piggybacking would suggest that:

  • If the third party is dealing with a lender who uses risk-based pricing , then their artificially inflated credit score may translate into a lower interest rate .
  • Artificially modifying credit scores may be considered fraudulent.
  • It’s one thing to add a friend or a relative, it’s another to add a stranger for profit.

Proponents’ views

Those who support the concept of piggybacking would suggest, in response:

  • Risk-based pricing, relying solely on credit scores, does not truly get to the fundamental “risk” of the applicant. So, the access to lower interest rates is not entirely piggybacking.
  • Credit scores are already artificially modified; That is, it is a made-up system. There is no difference between adding an authorized trademark and opening a new account; They both affect your credit score.
  • Federal Law, specifically the Equal Credit Opportunity Act .

Business model

  1. A company offering the piggybacking service to a network of creditworthy “card holders” or “vendors” who stand by their customers to their accounts for a fee.
  2. A third party, looking to increase their credit score, contacts the company. The company offers a service to the customer and charges the customer a fee per account.
  3. The client pays the fee (anywhere from $ 500.00 to $ 1,500.00 per tradeline).
  4. The company submits the order to the card holder.
  5. Once the trade line reports, the company pays the card holder their fee (anywhere from $ 100.00 to $ 400.00 per authorized user) and the company keeps the remaining funds as revenue.
  6. (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (a) of the Act respecting the state of the credit institution for the purposes of this Act.

Legality

There is no answer to the question as to the nature of the problem.

  • FTC spokesman Frank Dorman said: “What I have gathered from attorneys here is that it is legal.

According to the Fair Issac Co (The creator of the FICO Score, authorized user accounts are legal and FICO 08 will include authorized accounts in its credit score calculations. Users on other peoples accounts.

  • A report published by the Federal Reserve Board “This is possible because creditors have followed a practice of furnishing to credit bureaus information about all authorized users, whether or not the authorized spouses are Are not. This practice does not violate Reg. B ” [1]
  • In a written statement from Fair Isaac Corporation, on behalf of the Subcommittee on Oversight and Investigations, Tom Quinn, Vice President of Global Scoring Solutions for Fair Isaac Corporation, stated: “After [2] [1] [2] [2] [2] [2] [2] [2] [2] The Federal Reserve Board,

Up front fees

While the legality of piggybacking trademarks seems to remain unclear, a piggybacking company takes a fee for its fees.

Section 404 of the Credit Repair Organizations Act (the “CROA”), states:

“No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service that the credit repair organization undertakes to perform for any consumer before such service is fully performed.” [3]

Although the Federal Law appears to be clear, some States, including Florida, have enacted similar and stricter laws, requiring the use of Trust accounts for client funds and a surety bond of $ 10,000.00 or more. While this is a very large transaction, it does not appear to be subject to change without notice. For example, Section 817.7005, Florida Statutes states,

“… A credit service organization, its salespersons, agents, and representatives, and independent contractors who sell or
(1) Load or receive any money or other valuable consideration prior to full performance of the services. (1). (1) A person who is not a member of the board of directors of a corporation may be a member of the board of directors of the corporation. However, a credit granting organization has a surety bond,

Piggybacking risks

The risk to the “donor” is that the other person can actually make charges against the account, and not pay it back. The brokers who provide this service claim that they do not reveal the whole account to the recipient. It is possible, a container might learn the account number in Some Other Way, for example if it Appears On His own credit report . However, this is a PIN , expiration date, or security code is typically also required. These measures further lower the risk to the “donor”.

FICO ’08

With FICO 08 on the horizon many brokers who used to add “authorized users” to existing credit accounts “Seasoned Primary” accounts A “primary” account is an account in the borrower’s own name. In the case of the former owner of the property, the owner of the property and the owner of the property, , However, the lender is not alerted to the true status of the account history.

Authorized user accounts are legal and will be included into credit scoring; It’s a violation of federal law to not include all information in a credit file while calculating a credit score.

One thing is for sure, Federal Law, such as the CROA and the Federal Reserve Board Regulation B , at least allow a permissible purpose for adding authorized user tradelines.

Tradeline scams

While the Federal Trade Commission has written articles for consumers to assist them in avoiding scams. [4]

Some key components of these consumer facts suggest that you should:

  1. Ensure the company actually exists; Check state government records.
  2. Ensure the company does not have serious and unresolved complaints against it.
  3. Ensure you receive a contract from the company.
  4. Ensure the contract contains your rights under federal law.
  5. Ensure you have many forms of contact for the company.

References

  1. Jump up^ “Finance and Economics Discussion Series” (PDF) . Federalreserve.gov . Retrieved 2015-03-02 .
  2. Jump up^ “Written Statements of Air Isaac Corporation: Credit Scoring Models and Credit Scores” (PDF) . Archives.financialservies.house.gov . Retrieved 2015-03-02 .
  3. Jump up^ “TITLE IV – CREDIT REPAIR ORGANIZATIONS  . Archived from the original on December 22, 2011 . Retrieved December 8, 2011 .
  4. Jump up^ “Credit Repair: How to Help Yourself | Consumer Information” . Ftc.gov . Retrieved 2015-03-02 .