Do tradelines still help boost credit score in 2019?
As of 2017 it has been concluded in studies by the Consumer Financial Protection Bureau, that 25% of consumers that get credit usually kick start their credit history through means of piggybacking or the use of tradelines, usually from family or friends. Although the creators of the FICO score wanted to ban it, they were UNSUCCESSFUL, meaning the latest FICO score (FICO 8), which encapsulates the use of tradeline in its scoring models, is still widely used. Mortgage companies, auto lenders, and credit card companies continue to utilize FICO 8 to determine a prospective applicant’s creditworthiness. There may still be a possibility that FICO would exclude the scoring of tradelines in the future, but such a change would likely take years before industry and the marketplace adopt the model. Even today, many borrowers still use scores based on previous FICO 2, 3, and 4 scoring models. Therefore, we believe that, tradelines will continue to be a popular practice among banks and companies for many years to come.
Are tradelines legal in 2019?
In 2008 the Fair Isaac Corporation (creators of the FICO score) tried to exclude the the use of seasoned tradelines as part of the FICO score. They were able to bring the case all the way up to Congress, where it was decided that the use of seasoned tradelines would continue to be factored in FICO scores and the Fair Isaac Corporation’s petition was unsuccessful. The main reason that the Fair Isaac Corporation had to reverse their stance on the issue was because of the Equal Credit Opportunity Act of 1974, specifically Regulation B of the document. The act prohibits the FICO score from discriminating based on sex, gender, religion, and most importantly marital status. This allows tradelines to be legal because FICO and many other financial institutions do not check for marital status or any other type of demographic, therefore they have no way of knowing if an authorized user of the primary tradeline is a spouse or not, resulting in all authorized users being considered for seasoned tradelines. Overall it has been concluded that tradelines are not illegal, just as former FTC spokesman Frank Dorman,”What I’ve gathered from attorneys here is that it is legal, however, the agency is not saying that it is legal technically.” Two years later the Federal Reserve Board conducted a study on how the seasoned tradelines affect the credit industry. From their studies they were able to conclude that clients with small credit reports will greatly benefit from tradelines, but overall, they had no type of effect on the industry.
Although tradelines have been a federal practice that is under regulation, there are still corporations that can violate the Credit Repair Organizations Act of 1996. This act states that it is illegal to use misleading information and requires all disclosures to be made when offering “credit repair services”.
How popular are tradelines in 2019?
As seen in the graph above, after 2010 there has been a resurgence of the use of tradelines. The blue line represents the use of tradelines from 2004 until present. As you can see it has been constant flow over the years. With the rise of market interest rates and eroding purchasing power, consumers are turning to tradelines to quickly boost their scores and to secure additional credit. Additionally, the increase in consumer confidence in the markets since 2010 has positively impacted the tradeline industry, as more and more consumers look for effective and efficient ways to improve their credit scores. Since we launched in 2010, we have helped thousands of clients rebuild their credit, helping them to secure credit cards for themselves and to access funding they wouldn’t have qualified for before.
What are the consequences of using tradelines in 2019?
The primary benefit of using tradelines is having your credit scores benefit from the payment history of the primary user. If the primary users begin missing their payments, it can negatively affect their scores and yours as well. Your scores are predicated on the continual perfect payment history and low balances of the tradelines. Without the proper consultation, the use of tradelines can be expensive and risky. Having a tradeline won’t always boost your score, so it’s necessary to consult an expert to determine the best path forward. (Contact us today to speak to one of our tradeline experts!)
What credit boosting tricks are available but illegal in 2019?
Although there are claims to many techniques on how to repair a credit score, many end up being fraudulent. Many of these fraudulent companies promise quick ways to boost your score sometimes “instantly”, but there are practices that should be avoided. For example, it is illegal to purchase or sell seasoned primary tradelines. Seasoned primary tradelines are credit lines that have been opened under an individual years ago, and for a price, companies can transfer the credit line over to another person. If you did not participate in paying off the card or loan throughout the years, it is illegal for you to be the sole primary owner of the tradeline (you can be the authorized user, but not the primary user). Next there is disputing accurate debts, which is when the consumer calls the credit reporting agencies and tries to dispute debts that they clearly own. Although this is an illegal technique, there are some instances when consumers have debts on their report that don’t belong to them, in which case opening a dispute is recommended. Finally, some individuals change their SSNs by applying for an EIN, hoping for a clear slate with no debt. There are multiple risks in this method, and our recommendation is always to improve your SSN file. It may require more resources and time, but will reap long-term benefits.