Scam: Piggybacking Seasoned Trade Lines June 11, 2007

Piggybacking of so called 'seasoned trade lines' is a recent scam being exploited by some people with credit problems to improve their credit score. There are now 'businesses' that will enlist people with good credit who will accept money (about $100) to add a stranger as an authorized user or their credit card. The stranger doesn't actually get a credit card or even access to the account. What they do get is a credit card account, a seasoned trade line, listed on their credit report that shows it has been paid well. It looks like it is their credit card. One or more of these added to a credit report and some credit scores improve, including the FICO^® score, assuming all else stays the same.

But wait a minute! All three credit bureaus actually provide a code for every credit card (and all other credit accounts) on a credit report that indicates whether the person is only an authorizes user of that credit card. This code has been available for many years to all who analyze credit bureau data including credit score developers. Scoring Solutions™ believes that a person who is not responsible for payment of a credit card should not be given the benefit or the blame for the way another person handles their credit card and pays their debt. So for a long time Scoring Solutions™ has routinely evaluated this code and used it to exclude information related to authorizes user credit cards and accounts on a credit report. This piggybacking scam will not impact Scoring Solutions™ credit scores.

Some parents add their teenage children as authorized users on their credit card. Responsible teens may use it to make purchases that their parent approves. There car may break down and need repairs. They may use the card to purchase text books while away at school. Adding a responsible child as an authorized user provides the parent convenience and peace of mind. But should these teens be given the benefit of their parents' management of such a credit card? Scoring Solutions™ doesn't think so. But that is exactly the way it has been for many years with the Fair Isaac developed FICO^® risk scores. Essentially that score ignores the authorized user code and scores such accounts as if the person was responsible for the account. According to a Fair Isaac representative, "after discussions with lenders and industry officials, Fair Isaac said it intends to announce this week that all future versions of its FICO^® score methodology will no longer consider authorized user accounts".¹

Credit score developers work with detailed, complicated credit bureau data to create the variables that make up a credit score. There are many details about each credit card or other accounts communicated in codes from the credit bureaus. These codes and details differ for each of the three credit bureaus: Equifax, Experian and Trans Union. New codes are implemented fairly often. It is a complex task to understand the details of the credit data and then incorporate them appropriately into variables for credit scores. Not all credit score developers do this the same. Some do it better than others. Scoring Solutions™ regularly reviews and implements updates from credit bureaus. We are proud of our expertise in this area. After all, it is the foundation of many of our credit scores and that is our business.