Can Authorized User Trade Lines Really Boost Your Credit Scores?

Can Authorized User Trade Lines Really Boost Your Credit Scores?

YES! In some cases they can be a MAJOR Boost!

What are Trade Lines?

Trade Lines are a great tool to use, but they invoke many questions. This is a great post to visit prior to diving into some of the more complicated areas of Trade Lines. According to Experian.com a trade line is an entry by a credit grantor to a consumers credit history maintained by a credit reporting agency. A Trade Line describes the consumers account status and activity. Trade Line information includes names of companies where the applicant has accounts, dates accounts were opened, credit limits, types of accounts.

What Are Authorized User Trade Lines?

Authorized User Trade Lines (Piggybacking Trade Lines) are typically revolving lines of credit on which someone places another as an authorized user account holder. The Trade Line then appears on the users credit.

Authorized User Trade Lines (Piggybacking Trade Lines) has been used for nearly 40 years by mortgage brokers and lenders. It became a popular way to boost credit scores because of the Equal Credit Opportunity Act 1974, which allowed the process to legally attach credit accounts to someone else.

Are Authorized User Trade Lines Moral?

This is where the concept starts to cause friction.  People often make good cases for and against the morality of the practice.  Of course, the main point is that you are manipulating the credit system.  This seemingly sensible contention is the focus of this post.  The manipulation argument, as we call it, presupposes that the credit system is flawless, or even functional, in the first place.

Let’s take one hypothetical example:

Joe lost his job and fell behind on some payments.  Under the new FICO model, FICO ’08, credit scores are hurt the most by recent late payments.  A few months later, Joe gets a new job making 6 figures.  His ability to repay a loan obviously increased and his risk of default  dramatically decreased.  However, the FICO model, or any model for that matter, does not take this significant fact into consideration.  Now Joe is left with poor credit and a 6 figures salary.   Not only is Joe suffering, but so is the economy.  

A flawed credit system prevented a consumer from purchasing a product.  The real estate agent loses.  The loan officer loses.  The banks loses… yet the credit bureaus and credit scoring companies got their money when Joe’s credit was pulled.

Secondly, the credit bureaus and credit scoring companies are simply one thing… companies.  They are private corporations, who stand to financially benefit by judging you.  Their job is to appeal to creditors and provide an alleged risk assessment of you.  This is supposed to allow creditors to lend at lower risks of default.  Notice that I didn’t say that their job was to ensure that your credit file is accurate?

So, Are Authorized User Trade Lines Legal or Not?

We cannot give you legal advice and this should not be construed as legal advice, but Authorized User Trade Lines (Piggybacking Trade Lines) is authorized by the Equal Credit Opportunity Act of 1974 and the Federal Reserve Board Regulation B. ~Courtesy of STL~

If you would like to learn more about Authorized User Trade Lines (Piggybacking Trade Lines), please feel free to contact either myself or our offices anytime.

Prosperously Yours,

J. Allen Lillie
Credit Education Counselor
United Credit Education Services
Restore Your Score!
www.UnitedCreditAgent.org
Office: (888) 707-2226 x 8
[email protected]

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