How Does Credit Piggybacking Work With Mortgages?

 

Ah, purchasing a mortgage, that bastion of financial success, the flashing sign that you’ve made it, the smartest way to spend money, and the best way to build wealth. 

Is this still true? 

In times past Real Estate was the smartest way to use your money, because, like the stock market, housing values (while experiencing minor dips occasionally, usually went up over time), but then 2008 happened. Prior to that year, hedge funds and other financial institutions [cough big banks] created mortgage-backed securities, and insurance companies covered them with credit default swaps. High demand for this rock-solid can’t-fail securities led to an asset bubble, then the bubble popped. Markets recovered, banks got bailed out, but people still lost trillions of wealth. 

So are mortgages still a good thing to buy?

Of course! People need places to live. That’s never going to change. But…your credit, you need help, so can adding tradelines get you approved for a mortgage? Let’s get into the nitty-gritty first.

What Credit Score Do Mortgage Companies Use?

 

FICO. That’s it. So if you have a login to Equifax or Credit Karma, you’re getting a general idea of what your scores are, but an Experian login (usually), is more accurate since FICO is the Experian scoring model. But you won’t know for sure what your scores are until a lender pulls your reports. This is an inquiry, so it’s best to go in confident that you can get an approval as inquiries/hard pulls do affect your credit. Do you need anything special on your report to get approved for a mortgage? As in, should you purchase a mortgage tradeline to show on your report to ensure an approval?

Do Buying Mortgage Tradelines Help Get a Mortgage?

 

We get this question sometimes, though usually with auto loans. Some lenders think credit reports are like resumes (in some ways they actually are), in that you need to have a job experience to get a particular job in that sector, and you may find companies that offer mortgage tradelines for sale. These are primary tradelines, and they aren’t legal. You do not need to have a mortgage tradeline, or a legitimate mortgage, to purchase a first (or another) mortgage. So, now that’s cleared up. But…you’re here, so we’re going to assume you’re trying to find out what it takes to get a mortgage with sub-stellar credit. So, does that mean you should google mortgage companies that accept low credit scores

Not really, unless you are in some kind of rush, which most people are, but trust us, this is one time, maybe the most important time in your life, where being in a rush isn’t the best idea. So before you start looking for the best mortgage companies for low credit scores, we recommend clicking on this calculator and playing around with some numbers. 

Let’s take a 200k mortgage at 5.75%, which is approximately what you would get with a score of 580-640, monthly payment: $1,135.58

Let’s switch that to 3.75% (the best rate available right now), monthly payment: $926.23.

These are rough numbers, and rates change all the time, but even in this basic example, having an excellent credit score (760+) would mean $209/month difference.

Well, that’s not that much, right? Wrong, that’s $75,240 you’ll pay extra over the course of that loan. So if you’re googling “mortgage with 550 credit score,” stop, as the minimum across the board is 580, and you don’t want to flush 75 grand down the toilet do you? But, you are ready to look into buying a mortgage, but your credit sucks. 

How to Raise Credit Score in 30 Days

 

If you’ve got 30 days (or hopefully 45-60 days or longer), we can likely get you into a position where you can get approvals. But just getting approvals shouldn’t be your goal. Your goal should be to get the best possible rate so you can save money through the course of that mortgage loan. 

In 30 days, you most certainly can get your scores up by adding tradelines, but removing the negatives also needs to happen if you want the best rates, and that may take slightly longer. And, lastly, for the question we sometimes get. Does having a mortgage help your credit score? A mortgage, ultimately, is just another tradeline. It has no more weight than any other installment loan (student, auto, etc), but, as some smart financial writers have said, most things you buy are liabilities, meaning they lose money over time (like cars), but a home or condo purchase is an asset, as it accrues value, and buying a mortgage is still the smartest thing to do with your money. 

If you are looking to buy tradelines then stop your search here. We offer Seasoned Tradelines at lower pricing than any of our competition.

 

Requiem: Is Credit Piggybacking a Scam?

 

Recently, a credit repair and tradeline company was shut down by the FTC. According to the FTC’s complaint, the owners scammed people out of $6.2 million dollars over the course of their operations since 2014. If you want the details, the press release is here. This company had several websites where they claimed to be able to boost credit by removing negatives and inquiries, then adding tradelines afterwards to shoot the score up even more. 

So what happened? Does this mean that all companies, even the “best tradeline companies” are out to take your money and give nothing in return? No. This company, who used several different websites and shady practices, was out to make a profit by selling false promises while utilizing illegal business practices. 

Let’s break down what happened.

 

First: Selling Tradelines is Not Illegal

There is nothing illegal about paying someone or a company to be added as an authorized user on someone else’s credit card. In essence you are renting data that helps give you a credit boost. While you are an AU, you have a window to attempt to achieve your financial goals, which likely involve some type of lending, be it mortgage, auto, business, personal loans, or credit cards. 

 

Second: Credit Card Piggybacking is Not An Exact Science

One of the things this now-defunct company did was promise certain scores within a certain amount of time. They took advantage of people’s needs by playing into a fantasy.

Everyone is looking for certainty. If we spend money we want to be sure we get the results we want, but adding tradelines is not a guaranteed better score.

 Anyone who uses the words “promise” and “guarantee” when it comes to your credit score is trying to scam you, because they, us, and anyone who isn’t, the Fair Isaac Corporation cannot know how your scores will be affected. Do we have an idea? Yes, we wouldn’t have tradelines for sale if there was no benefit. This niche industry wouldn’t exist if it didn’t work, but you must be careful to understand what is guaranteed. The line posting on 2 of the 3 bureaus, the line having low utilization (below 10%), the line having perfect payment history–these are legitimate guarantees because we can control these things. Even the best tradelines are worthless if any of the three categories are violated on the tradeline.

 

Third: Tradelines for Credit Repair Have Some Strict Laws

When engaging with someone professional in any type of credit repair: removing negatives, or adding seasoned credit tradelines, the law states that the company or person cannot take possession of the funds paid until the job is complete. This means that it is illegal for someone to say they will clean your credit, take money, and spend it. The funds must be held in an escrow account until the job is completed. 

 

Fourth: Buying Tradelines Does Require Some Common Sense

One of the things this company did was threaten legal action against anyone who publicly complained about their lack or results, due to “anti-disparagement and anti-chargeback contract clauses” they put in their contracts. So, this company had seasoned tradelines for sale, and they said if you didn’t get the results you wanted, and you complained, they would sue you. That should make just about anyone wary of signing on the dotted line. If you’re getting trade line credit added to your report, you should have a good idea of what happens, you should not be surprised and upset after they post. This goes back to being careful about what you are paying for. Plenty of people in business will promise you the moon and disappear. 

 

Conclusion

If you click on the press release link and see the companies involved in the FTC lawsuit, you can google their names and see their reviews. 

There are plenty of bad ones. 

As we said earlier, buying tradelines to boost credit score profiles is not a highly precise endeavor, but when reading the reviews of this company and their services online, you can see they were scamming people. 

This is why online reviews are so important. If you are buying tradelines, how are the reviews? 

The bottom line with this company is: they weren’t out to help people, and it was because so many customers complained (rightfully) that this company is no longer in business. 

What are the Best Lenders for Credit Card Piggybacking?

 

Part 1

The most constant thing in the world is change. Sometimes drastic–think major life events, natural disasters, etc…and sometimes subtle and slow–think erosion, paint drying, etc. Credit is one of those things that change gradually over time, hopefully a slow steady rise to elite territory (760+) and staying there…but credit can also drop drastically if you miss a payment on your credit card, mortgage, etc. 

You can get your credit to jump quickly, with tradelines, which are credit cards that report authorized users. Perhaps you’ve heard of them. “Piggybacking” is the official term, as you are using someone else’s account to benefit your FICO scores. They add you as an authorized user, their payment history and limit (and utilization) get reported on your bureaus. But if you’re going to become an authorized user on someone else’s card, how do you know what lender to pick, does it matter, should you care? 

Let’s put it this way, tradelines can be expensive, over a thousand dollars in some cases, and sometimes far over that, so if you pay for an authorized user spot on someone else’s card, and you’re going to spend hundreds if not thousands of dollars, you would probably want to know what you’re paying for, right?

That little aside…aside, if a seasoned credit line posts to 2/3 bureaus we consider that a success, and the lender doesn’t really matter that much, as long as it posts, but there are subtleties to different lenders, and we can break a few of those down and give them our very best qualified “NAY” or “YAY”! 

 

Does Discover Report Authorized Users?

In a testament to how things change, when Boost Credit 101 started, Discover was considered a third-tier tradeline. They mostly didn’t post to three bureaus, and sometimes not even two. Now Discover is one of the best, though they do require images of the AU’s driver’s license and SS card (a W2 works in place of the SS card image). They post to 3 bureaus the most consistently. They are an upper-level bank, with slick advertising, that requires excellent credit to be approved for.

Discover: YAY! 

 

 Does Capital One Report Authorized Users to Credit Bureaus?

Ah Capital One, those savvy marketers with Samuel L. Jackson played by Nick Fury asking “What’s in your wallet?” all the time. Capital One is the one major lender that has cards for approval across the widest ranges in credit score. Their Quicksilver requires “good” credit, and perhaps even the upper levels of “fair” (669 and down). They post consistently to all three bureaus. 

Capital One: YAY! 

 

Does American Express Report Authorized Users to Credit Bureaus?

American Express, the cadillac of credit cards. They have the most advanced

systems, the best customer service, and the unicorn of all tradelines: the Black card. You can’t even apply. You must be invited. 

A year ago AmEx paired up with GQ for a sort of mini-documentary (more commercial) showing two well-dressed men eating and drinking in the most luxe Sydney establishments before flying to Los Angeles–one of the fellas even had an espresso martini. So you’d think that AmEx would be great for getting AU history, but they aren’t. They post fine to all three bureaus, but they don’t report their history.

One of the most valuable things about tradelines is that a 20 year old card goes on your report and affects your credit like it has been there since it opened, thus giving you 20 years added to your average history. 

Since AmEx doesn’t report history, they are all but worthless as tradelines unless you just turned 18. 

American Express: NAY (but you should get an approval for one when your score is good to excellent)

 

Does Merrick Bank Report Authorized Users?

Who knows? We’ve never heard of them, never seen them offered as tradelines. 

Merrick: NAY

 

Does Citibank Report Authorized Users?

Citibank is a conundrum. They do report AU history, but their systems are in dire need of upgrade, because either their software isn’t up to snuff or the human component of their customer service makes mistakes. They are the lines that require a bit of extra work to get posted, if they post. By this we mean a soft pull, where you put the address of the tradeline into an experian-powered login as your own and order the 3 reports. A great bank to do business with it seems. They have the largest variety of credit cards available. 

 

Citibank: Toss Up

Wait, Why is This Called Piggybacking?

 

Just what is the origin of piggy back ride as far as we have come to know it? Well, a long time ago, think 16th century, people would carry a bag on their back called a “pick pack,” because you could pick it up and put it on your back. The Pick Pack eventually got called a “pick-a-pack” and that eventually became “pick-i-pack” and that eventually became “piggyback,” which now refers to the practice of someone jumping on your back and going for a ride, hence “piggyback ride.” The term refers to something fun and playful done between humans, and actually doesn’t have anything to do with those oinky pachiderms we all know and love. Language is weird folks; the piggy back ride origin story is one of thousands of strange little snippets. And what does this have to do with credit, you may ask?

What is credit piggy backing?

Just like a person may give someone a piggyback ride by carrying them on their back, so a person with poor or no FICO score can piggy back credit by being added as an Authorized User onto the card of someone with excellent credit. And when you get right down to it, a person doesn’t even need to have a great credit score to use their cards for this method, they just need to have perfect payment history and keep their utilization low. But, let’s be honest, if someone does have great credit habits, then their score is likely indicative of that. They’ll have a great FICO score and a great piggybacking credit score because they aren’t any different. Also, if someone with great credit cards does somehow lose their great credit score, the companies who have given that someone great credit cards will eventually see that through random spot checks and adjust the limit (or cancel the card) accordingly. But let’s leave that aside. Is there a difference between your real score and the piggyback credit score you achieve from utilizing this practice? No, there is not. That is because no institution can see what the score of someone is without that AU. Now, you do need to be a bit smart here. If you go to a lender and have a poor score, but then get an AU or two (or three) and then come back they might say “hmmm, something odd here,” but that is only the most conservative (read smaller) lenders, because let’s face it, if you go to a car dealership and you can cash-flow a loan and your score warrants the sale, they will sell you a car, every time, so, ultimately, there’s no reason to worry about piggybacking credit scores to improve your chances of getting approvals. So, you can piggyback on your friends and relatives, or you can utilize credit repair companies that use piggyback methods.

There are credit piggybacking companies?

You find a need for just about anything these days, and someone somewhere will be able to satisfy that need. If you find a need that a whole lotta people have, and you have a viable solution, well then you’ve got the impetus for a business. That’s capitalism folks. There aren’t a ton of piggyback credit companies, but there’s more than a few. These companies, like the one whose site you are on right now, utilize a method that they would prefer the banks not look too hard at. There isn’t anything illegal going on, but the banks don’t like it. They could make changes to streamline or prevent piggybacking, but the truth is, the more AU’s a person has on their cards, the more chance of racking up debts banks can charge interest on. Banks are greedy. Again, that’s capitalism. But you’ll never representatives from piggybacking credit companies on any major news station. It’s an “in the know” kind of thing. Piggybacking is also another way to say use tradelines, and the people who know what tradelines can do have the power to turn a low credit score into a good or great score faster than the people in the “normal” part of the credit industry think possible. And the best part? It’s cheap for what you get. Maybe not piggy back credit for cheap $100 cheap, but it will cut months, even years off the time it usually takes to get a good credit score.

Is “piggybacking” legal?

A few years ago, the creators of the FICO credit scoring system announced that they would stop including authorized users in the latest version of their FICO 08 scoring model which essentially will place an end to “piggybacking”. The monopoly of credit reporting i.e. Transunion, Equifax and Experian did not consider the Equal Credit Opportunity Act also referred to as Regulation B. They later reversed their decision since it would be incompliant with ECOA and here is what experts have to say:

“Fair Isaac, following the recommendation of the FTC counsel, admitted that it would be illegal to ignore authorized user credit histories as a part of the FICO score calculation.”

Steve Cypher, Reporter – www.autocreditexpress.com

 

“Fair Isaac Corp., creator of the well-known FICO credit score, had announced last year it would end the practice…” of piggybacking “…but during Congressional testimony Tuesday, acknowledged it had changed its mind”

Jeremy M. Simon, Staff Reporter – www.credit.com

 

“This is possible because creditors generally have followed a practice of furnishing to credit bureaus information about all authorized users, whether or not theauthorized user is a spouse, without indicating which authorized users are spouses and which are not. This practice does not violate Reg. B”

Robert B. Avery, Kenneth P. Brevoort, and Glenn B. Canner – Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C.

 

“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 thecredit report”

Thomas J. Quinn – Vice President of Scoring Solutions, Fair Isaac Corp.