Got A Good Credit Score? Rent It To Someone In Need

from the let's-trade dept

One of the common consequences for victims of identity theft is that they can see their credit scores get damaged, and because the big credit agencies don't offer much help in monitoring and fixing this, it can be a major hassle to get the problem resolved. Barry Ritholtz to an interesting story about a different kind of fraud, whereby people with good credit scores can sell their credit histories to people who want their own score boosted. Basically, the law states that people are allowed to add an unlimited number of individuals to their credit card accounts; it's mainly intended for parents who want to put their kids on the account. But, various websites have emerged to take advantage of this loophole, enabling people with bad credit histories to improve their score by getting access to a good credit history. It's not clear how widespread this actually is, but it pretty clearly violates the whole point of a credit score, since it's supposed to give the lender some idea of how reliable the borrower is. Fair Isaac, the company that developed the FICO score, says it's currently in talks with the FTC to stop the practice. The question, then, is whether shutting down this loophole will do the trick, or whether credit history brokers will simply find another loophole.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    RandomThoughts, Apr 25th, 2007 @ 5:24pm

    This has to be the stupidest idea I have ever heard. When you sign on the dotted line for a credit card or any other line of credit, you become financially responsible. What does that mean? If the person doesn’t pay the bill, you have to. The deadbeat might not have a car that can be repossessed, but the person signing for them would.

    Your credit score could be the least of your worries.

     

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  2.  
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    Republican Gun, Apr 25th, 2007 @ 5:42pm

    Money is Debt

    Money is just a unit of account. It accounts for your worth. If you spend more than you are worth you go into debt and become a slave to the lender.

    I think Prosper.com has a better business model in where groups loan to each other.

     

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  3.  
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    Jessie, Apr 25th, 2007 @ 5:49pm

    Random Thoughts is Right

    My father, after being screwed over financially by my four older siblings, wouldn't co-sign his name on a dog permit, and I don't blame him. He gave my deadbeat brother his old car, and he never bothered to register the car in his own name. My brother got into a fatal car accident, and my father was the one who got sued. Even though he was able to establish that he wasn't the owner of the car, it took an attorney and tens of thousands of dollars in legal fees. The bitch of it is that the accident was determined to be the fault of a third driver, who had a seizure behind the wheel. You really have to be insane to put your name on anything that doesn't belong to you.

     

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  4.  
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    Ryan, Apr 25th, 2007 @ 5:53pm

    Stupid Idea? nahhh

    Where's the harm in having someone else on your credit cards, PROVIDED they do not actually HAVE the credit cards, and you have the account setup so only you can get to it? I recall reading there are some rudimentary safeguards in place. Easy way to make some $$$

    Besides, when cards such as https://www.firstpremierbankgold.com/ exist, they deserve it.
    (Read the fees and the fine print on that AWESOME deal!)

     

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  5.  
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    Mandie, Apr 25th, 2007 @ 6:00pm

    I don't think they are adding them as an actual authorized user. I believe that they would, if they were smart about this, just be adding them without giving them any way to actually use the card. This way they would benifit from the score, but not be able to mess someone else's scored up by not paying.

    I do get how this is not a good thing for the mortgage companies though. It does not show proof that they are a good credit risk. Who knows, they might actually continue to do well, but there is always the chance that they could mess up.

     

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  6.  
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    Anonymous Coward, Apr 25th, 2007 @ 6:05pm

    Fair Isaac is talking out of both sides of its mou

    What a ridiculous situation when Fair Isaac starts complaining to the FCC about this "loophole" when its own system is a closed standard that nobody understands.

    In essence, they should either play by private company rules, or play by public entity rules. This is supreme garbage and the FTC should tell them to take a walk if they don't open up the way FICO scores work.

    More to the point, the credit reporting agencies and industry as a whole need to be revamped. They're out of control, allow people's lives to be ruined on a whim without due reciprocal recourse, and don't reward good credit (i.e. early payment should make your credit better, not just late payment making your credit worse).

     

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  7.  
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    FICO is communist, Apr 25th, 2007 @ 7:52pm

    Anon is Right - FICO is communist

    Fair Issac is a proprietary, private system that ruins peoples lives and won't divulge their math. FICO scores are supposed to be statistical predictors - but won't divulge the formula. How can one succeed if they don't know the rules of the game?

     

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  8.  
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    Anonymous Coward, Apr 25th, 2007 @ 8:19pm

    Re: Random Thoughts is Right

    Why does the owner of a car have anything to do with who gets sued for crashing it? Does that mean I am immune from prosecution when I destroy things with a car, as long as it belongs to someone else?

     

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  9.  
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    bob, Apr 25th, 2007 @ 8:24pm

    The System

    Entropy is a wonderful thing, it's about time this very old and unreliable system is dismantled.

     

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  10.  
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    GregD, Apr 25th, 2007 @ 9:34pm

    Re: Re: Random Thoughts is Right

    The general thought is, once someone is in an accident, you SUE!!

    Sue the driver, sue the owner, sue the manufacturer, sue the innocent bystander who saw it happen, heck, sue the city because they built the road!!

     

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  11.  
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    mkam, Apr 26th, 2007 @ 5:20am

    Re: Stupid Idea? nahhh

    Wow. Kind of off topic, but who in there right mind would 'apply' for one of those bad boys. $72 for the privilege of applying?

     

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  12.  
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    Anonymous Jerk, Apr 26th, 2007 @ 5:30am

    It's killing the concept of a credit score

    I made some bad choices when I was younger (18-21), and my credit is still recovering (some 3 years later, lol). However, as stated in the article, this kills the concept of even HAVING a credit score. Now lending institutions will probably retaliate by making it even TOUGHER to get a loan (lease/mortgage/etc.), meaning even fewer people will have 'good enough credit' to qualify, and the cycle repeats.

     

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  13.  
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    SmartAssWhizKid, Apr 26th, 2007 @ 6:23am

    Re:

    "This has to be the stupidest idea I have ever heard. When you sign on the dotted line for a credit card or any other line of credit, you become financially responsible. What does that mean? If the person doesn’t pay the bill, you have to. The deadbeat might not have a car that can be repossessed, but the person signing for them would.

    Your credit score could be the least of your worries.

    Did you even read the article? The person is only using the _credit score_, to boost his/her credit, not the account.

     

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  14.  
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    Wizard Prang, Apr 26th, 2007 @ 8:39am

    It is ironic....

    ...that to get a "credit" score you have to get into DEBT!

    If I had a million dollars in the bank, would that affect my credit score?

     

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  15.  
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    Andrew Klossner, Apr 26th, 2007 @ 3:31pm

    how?

    When I put my college-age daughter on my credit card, I called the bank and asked them to send me another piece of plastic with my credit card number and her name. They don't have her social security number, so this is doing nothing for her credit history.

     

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  16.  
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    Ric, May 22nd, 2007 @ 5:52pm

    The good old days

    What happened to building a reputation with a bank? Back in the day, that was how you got lines of credit. One would open an account with a bank, and after several years of doing business together, one would be considered worthy of a loan. Are all banks off that system entirely?

     

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  17.  
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    Wizard Prang, May 31st, 2007 @ 7:35am

    Re: The good old days

    What happened to building a reputation with a bank?

    Banks stopped dealing in reputations and started dealing in numbers.

    Also banks became more centralized - the "manager" often cannot write a loan without permission from Head Office... which is often in a different State.

     

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  18.  
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    Melly, Jun 7th, 2007 @ 11:02am

    Re: The good old days

    Yes.. I own my own business and have been with my current bank about 3 years, they wouldn't give me a fly of their wall to save grace. I could move my accounts, but what is the use, other banks in the area are just as bad or worse.

     

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  19.  
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    C'mon let's be real, Jun 7th, 2007 @ 5:17pm

    The real question is "Why would someone with a GOOD credit score want to sell it to someone? Other than a few dollars What's in it for them. I thought you had to be Smart and Savvy in order to have GOOD credit anyway.

     

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  20.  
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    Soudns good, but..., Jun 17th, 2007 @ 12:22pm

    A Chicago Tribune article reported some companies pating as much as $10 Grand to rent your good credit history for 90 days so others could get boost their scores.
    But does this activity involve inquirires into your credit history (which can imapact your score)? To how many customers are they selling your good history (1 inquiry for each customer) in that 90 days? And, what does your good score look like 6 weeks later?

     

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  21.  
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    Heather, Jun 20th, 2007 @ 1:38pm

    sounds good, but

    I was wondering the exact same thing about how the inquiries would affect the person with good credit who is loaning it out. I read a story about a guy online who did this with a total of 19 authorized users on his various accounts. That article did not address the inquiry topic either.

     

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  22.  
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    Anonymous Coward, Nov 1st, 2007 @ 12:40pm

    FICO has been screwing people and ruining lives for years. Is what some naïve kid does when he’s 18 and doesn’t fully understand credit and scams that some less reputable credit card companies run really mean that by the time they are 24 and much wiser to the way of the world he won’t repay his debts now that he is out of college and has a decent job? No it doesn’t. Plain and simple. Now that said person has been screwed by ruining their “credit” with a couple cards that took years to repay with the ridiculous interest rates and fees can’t buy a house or rent a decent apartment even though they haven’t messed up in years. It’s ridiculous. The whole system just sucks. There should be a much lower statute of limitations and time frame in which they judge your ability to repay. If in the past two to four years you haven’t had a single credit blemish I think it’s safe to say you’ve gotten your act together and are a much more responsible person. I’m glad someone finally figured out a way to stick to these jackasses. The whole system needs to be brought down ala Fight Club.

     

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  23.  
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    Christina, Feb 18th, 2008 @ 1:17am

    Re:

    ur using there score not there info I guess u didnt understand what u read

     

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  24.  
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    Dar, Jul 25th, 2008 @ 3:02pm

    FICO Scores

    Okay, I know this stuff you all wrote is almost a year old, but I just read the book by Kevin Trudeau Debt Cures and even though he sound like an informercial the whole book, there are some good tid bits in there for someone to use to get out of debt. One thing he did mention that got my blood boiling was that the calculation of the FICO score is some patentened algorithm formuly that no one can know. That is just wrong. What gives this guy the right to keep those things private? Don't we as consumers have a right to know how to calculate our credit scores before we apply for things? I think something should be done about that. The whole time I read this book, I kept thinking that we (consumers) are the ants and the big credit companies are the grasshoppers. Individually they have us intimidated, but if we join together, we could take them down. Who's with me?

     

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  25.  
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    Witchdoktah, Feb 10th, 2009 @ 7:36am

    FICO Scores

    you know I am sure there is a reason for not divulging the algorithm. It's probably something jacked up like scores for certain races, colors, age, nationality, sex, etc. that being the case they wouldn't be endorsed by the government and wouldn't be able to use the algorithm. I wouldn't put it pastthem, there being some sort of dark secret to the algorithm. My mother once applied for a loan with her maiden name(hispanic) and was denied. re-applied with her married name(caucasian) and was approved..how about that.

     

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  26.  
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    Anonymous Coward, Jul 22nd, 2009 @ 11:17pm

    The reason the Fico Algrithm is seceret is so they can sell it to those "free Credit report.com" type of companies. There is no Racial or Global Conspiracy you morons. Good lord, no wonder why there are so many stupid people in the world! do a bit of reading, shit do a bit of learning! too many spenders with no regard to consequences, including our president obama. that's why we are in this mess. The Credit scores are just that, the ability of the reported person to manage his/hers CREDIT.

    let me isolate that for effect, it takes CREDIT to prove that you can effectively use CREDIT.

    so for those of you that are slow, and by reading the comments many of you are terribly slow, in order to get a good CREDIT score you must EFFECTIVELY use CREDIT to prove to lenders that you are responsible. dang, that is so simple huh? it is scary to me how stupid the public is.

     

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  27.  
    identicon
    Anonymous Coward, Jul 22nd, 2009 @ 11:20pm

    The reason the Fico Algorithm is secret is so they can sell it to those "free Credit report.com" type of companies. There is no Racial or Global Conspiracy you morons. Good lord, no wonder why there are so many stupid people in the world! do a bit of reading, shit do a bit of learning! too many spenders with no regard to consequences, including our president obama. that's why we are in this mess. The Credit scores are just that, the ability of the reported person to manage his/hers CREDIT.

    let me isolate that for effect, it takes CREDIT to prove that you can effectively use CREDIT.

    so for those of you that are slow, and by reading the comments many of you are terribly slow, in order to get a good CREDIT score you must EFFECTIVELY use CREDIT to prove to lenders that you are responsible. dang, that is so simple huh? it is scary to me how stupid the public is.

     

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  28.  
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    chirs browne, Dec 18th, 2010 @ 7:54pm

    credit

    need to buy a car need your credit to rent.please email me at.marica dash.chris @gmail.com

     

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