Using Seasoned Authorized User Tradelines To Improve Your Credit Report
When it comes to the art of improving a credit score, there are many strategies and philosophies that are implemented by various experts throughout the country. Credit repair companies offer their credit improvement services on monthly programs, many times they package plans with catchy levels VIP, Platinum, Gold, and even Bronze for the budget minded. A select few services exist where customers pay after negative items are removed, so called “pay after deletion credit repair” programs, which is a more results driven format. However these methods can take time to improve one’s credit. Most people are seeking much faster results.
One of most popular methods for achieving some of the fastest results during the last 10 years has been to implement the concept of “piggybacking” off of existing credit tradelines. It was discovered almost 20 years ago that many credit card companies report the entire history of a credit card on both the original cardholders as well as the authorized user’s credit report. This benefit started to show itself when parents and relatives added family members as authorized users so the family member could use the card when they needed it. This complete reporting of the excellent payment history of the cardholder to the authorized users credit report resulted in a score improvement of at least 20-30 pints and often as much as 100 points. This improvement took affect as soon as the information appeared on the authorized users credit report. Soon after these authorized user, “AU” tradelines started being used as a way for those who needed to improve scores quickly and significantly to achieve better interest rates on car loans, home mortgages and virtually all types of credit-based lending.
Finding an individual who had a credit card with high limits and low balances coupled with perfect credit history over a several year period in your family was many times hard to do but having the ability to, in effect, rent a strangers credit and have them add you to their card became an instant game changer in the credit repair industry.
Catch a Ride on the Piggyback Express and get Seasoned Tradelines
In order to “piggyback” using the excellent credit of another individual the card holder with the great credit must add the person needing the credit lift as an “authorized user” to an existing tradeline aka credit card account. The term “authorized user” was intended to gives the user the ability to use the card to make purchases. However, due to the fact that the cardholder controls the access to the physical card and all the pertinent information associated with the account the cardholder ultimately has the final choice in determining if the authorized user will actually get access to the card or not. This control eliminates any risk to the cardholder should they withhold access to the physical card. Banks will not release private information to authorized users even if they were to somehow get all the card information. This safety to the cardholder and the value provided to the authorized user gives the holder of the card the ability to allow someone to “rent” their credit history….for a price.
Naturally the first and most common source for AU accounts were family members. Parents were sending their college bound children to school armed with huge credit jumps by simply adding their names to existing cards. College students were then able to “piggyback” off of their parents dedication toward maintaining excellent credit and obtain lower interest rate loans necessary to help them complete their education and establish a solid payment history of their own to compliment the initial boost which was provided them. Of course the credit repair industry realized this concept for bolstering credit could easily be used to improve people’s credit regardless of their relationship or knowledge of an individual. All that was needed was the consent to add someone as authorized user. Relationship between the two people on the credit card had no bearing on credit because the credit reporting bureaus were not interested at all in genealogy. Companies began to launch advertising campaigns centered around recruiting stellar credit individuals by offering to “lease their great credit” and provide an additional source of monthly income. Mutually beneficial advantages were listed as opportunities through the following marketing slogans and ideas:
For the people whose credit was needed:
- Put your credit to work with no risk anonymous trade line rental.
- Earn hundreds of dollars each month by renting your good credit.
For those who needed to use the credit line:
- Purchase tradelines and instantly raise credit.
- Raise your credit 100 points overnight with AU Tradelines.
The Caffeine of the Credit Repair Industry:
The reason the chance to pay to use someone else’s credit was so important ten years ago remains as the most viable application for highest and best usage today. For those needing a fast and significant boost for major purchases of homes and autos the difference in rates and terms can result in multiple thousands of dollars in potential interest savings over time. Considering that only a 1% difference on an average 30 year home mortgage of $300,000 can result in more than $60,000 in savings over the course of the loan made the decision to pay for a fast bump to snag better rates well worth the time and expense involved. Often the credit difference by increasing a credit score by 50 points can result in lower payments of hundreds of dollars each month and over time that can easily shave $100,000 or more off by qualifying for the lower interest. Through time banks and lending institutions caught up with the long term benefits of AU tradelines and now the “window” of opportunity seldom stays open longer than a few months. That short lived, narrow opening still allows borrowers to jump through for once in a lifetime chances to save on interest.
Here are a few scenarios which explain why consuming a little credit caffeine is worth the effort and cost:
- Auto loan $25,000 at 60 months – interest rate 9% monthly payment = $519.
Savings at 4% interest rate = $3500 in interest.
- Home mortgage $350,000 at 30 years – interest rate 7% monthly payment = $2,329
Savings at 4% interest rate = $236,000 in interest.
Borrowers who need to be pulled up the mountain:
Those individuals who initially borrowed money using low credit scores must now feel like they have been trapped under a mountain of debt due to the huge interest rates or even worse, large balloon payments soon coming due. It is as if they are stuck at the bottom of the mountain with no way up. They have to pay huge interest rates and as many might be able to pay it but those few are most likely just barely getting by.
Thus never really having the ability to climb the mountain of success. Either that scenario is accurate or in the case of the huge balloon it might be as if a large storm of financial tragedy is heading toward the mountain and the days are being counted down until it crashes against their shores. Either situation is not pleasant and they could certainly use someone to help carry them to safety before their monetary lungs are flooded with too much interest to keep breathing. When the credit starts to improve and they get to the point where they are only 20-50 points from obtaining an excellent rate in the form of a new fixed rate mortgage, they are literally begging for the chance to jump up and be carried to the safety of the new option. The chance to invest in an AU tradeline may well be the last ride to safety by creating a brief window of opportunity with which to secure an option to avoid potential financial disaster. Losing the home is certainly not an option after paying in tens of thousands of dollars over the years and finally reaching a positive equity situation with the bounce in real estate prices. It is exactly like they have literally weathered all of the financial storms with the real estate fall out, home loan crisis making it harder to borrow money and then end up losing everything because the water rose just a little too fast to reach a financial solution. By utilizing the piggyback approach the following can be achieved:
- Avoiding foreclosure or selling the property due to not being able to secure funding to satisfy the lump sum payment.
- Continuing to lose ground against positive equity by paying excessive amounts in interest as opposed to more quickly reducing the principal.
- Guarding against potential limits on refinancing which may occur due to any faltering in real estate values or insecurity of lending institutions based on economic constraints.
Eventually the holes in the fence are patched
Realizing the great opportunity for borrowers to take advantage of the AU tradeline “hole” in the financial credit fence, lenders have started implementing measures to find and isolate situations which look suspicious to them. Credit card companies have also started closing the gaps by warning and eventually closing credit card lines for individuals who have suspicious amounts of multiple authorized users. There are limits on the number of authorized users which can be added to each credit card monthly based on individual credit card companies. There are also limits to the reporting of authorized users to all credit bureaus. Some credit companies have reduced the reporting to one or two of the three agencies and some have decided to either drag their financial feet, so to speak, and take their time prior to releasing the information to the bureaus. Mortgage lenders are also starting to deny loans when they suspect AU activity or require the proof of relation to the primary owner of the trade line. As with anything which seems to good to be true it tends to be discovered and savaged by those large banking groups which seem to dance gingerly around the legalities of their processes and procedures through high priced lobbying and manipulation of the rules. When it comes to the interests of large banks, as illustrated by their failures few rules really apply and they are rarely held accountable for their actions. The sources of defense against the AU tradeline advantage for borrowers includes:
- Slow reporting of Seasoned AU Tradelines to the bureaus.
- Restricted reporting or elimination of reporting of AU tradelines to one or all credit bureaus.
- Questionable legal practices by denying loans or requiring special proofs and explanations which may be considered a breach of ethics which is loosely enforced for large banks.
- Reducing the length of time AU tradelines are reported on the bureaus, resulting in narrowing the window of opportunity for borrowers to take advantage of boosts in credit.
A Safe Option With Limited Information Necessary
The best part of the AU tradeline is that the owner of the credit card nevers provides any personal information to the authorized user. There is no risk of identity theft and since there is no extra card sent to the authorized user there is no chance for charges to be made which might damage the stellar credit of the individual. On the side of the person seeking to buy the “block of credit”, they need only to provide the selling broker with their name and social security number in order to be added to the card. In approximately a month all of the history from the start to the current specifics of the credit card start appearing on the credit report of the one needing the “bounce” in score. Once that window is open it is high time to secure the needed credit rates to ensure that the investment was well worth every penny. There are even a select few brokers who “escrow” the fees until after the information begins to show up and raise the credit score. That type of results driven service is rare but does exist and can be located through research. With the funds not being released until after the results are achieved there is relatively no risk involved. Some people try and project when the credit will be raised and actually formulate a plan with items needed for the fastest loan approval at the new and improved credit level. Pre-planning items are commonly associated with the following:
- Contact and working relationship with a mortgage professional. Actual lenders will not be able to be of value since the credit will be pulled at the start of the process.
- Explaining a plan and potential target dates with the mortgage expert will provide for the shortest possible time to complete the loan process once the window is open.
- Having everything collected as far as tax returns, personal information and all items where only the credit report needs to added once the score is achieved will provide the best chance for hitting the window of opportunity provided during the credit lift.
Keeping Up With the Pace of Society:
With the pace of society making it necessary to change processes and procedures to try and stay ahead of advanced technology used by big banking interests to keep rates high, time is precious. If more loans are approved at higher interest rates then the windfall in interest for the lending institutions is a staggering amount. A race to jump through the window of opportunity provided by the Authorized User Tradeline before big finance slams it shut could be a game changer for the average American borrower. Speed and accuracy are key to completing the task in the best and most reliable method possible.
Are Buying Tradelines Still a Thing?
As you can see from the chart below the highpoint of searches of tradelines was back in 2008. Since then they have trended down until recently where the desire and need for them have increased as more and more people are searching for them.