Tighter Lending Standards Make Credit-Piggybacking Services More Popular

from the rent-a-score dept

Back in April, we wrote about services that offered to rent good credit ratings to people with poor ones, so they could get a mortgage or other loans. We were pretty skeptical that many people would be interested in actually renting or selling their credit scores to other people, but a new story in the New York Times claims that the services are partly to blame for the problems in the subprime mortgage market -- problems which are weighing on the overall financial markets. In a reaction to an increasing number of mortgage defaults, lenders are tightening their policies and requiring more documentation from potential borrowers, in an effort to more thoroughly vet them and weed out people who won't have the ability to pay back their loans. The NYT claims, however, that instead of cutting down on the amount of fraudulent applications, the higher standards actually appear to be leading even more applicants to these service. This issue -- whereby a person can "piggyback" on another's credit report and gain benefit from it -- is just one that's fueling financial institutions' unhappiness with FICO scores, and the company behind the system, Fair Isaac, says it's making changes to eliminate the positive influence of piggybacking. Even with those changes, though, it's likely that lenders will continue to seek out additional services to judge the creditworthiness of borrowers.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anonymous Coward, Jun 18th, 2007 @ 11:12pm

    Screw those damn hippy credit agencies!

     

    reply to this | link to this | view in thread ]

  2.  
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    Anonymous Coward, Jun 19th, 2007 @ 4:45am

    what?!

     

    reply to this | link to this | view in thread ]

  3.  
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    Anonymous Coward, Jun 19th, 2007 @ 6:35am

    Some agencies don't even allow piggy-backing anymore.

     

    reply to this | link to this | view in thread ]

  4.  
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    TheDock22, Jun 19th, 2007 @ 7:13am

    Why is it FICO's fault?

    If you are dumb enough to get a loan through a subprime lender, then you deserve to have the hassle that comes with it. Your FICO score helps lenders decide if you are responsible enough to loan to, i.e. you will pay them back on time every month.

    That is the problem with this country, no one is willing to work hard to get what they want. If you go to a bank and get denied for a mortgage loan, instead of turning around and looking for someone to give you a loan (subprime evil lenders) why not work harder at establishing your credit history or maybe wait until you make more money? Why do people think they deserve everything now?

    I am sure there are some people with horror stories of the credit bureaus mistakes and how their FICO score kept them from getting loans because of this, but guess what? That doesn't happen a lot.

     

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  5.  
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    Shes always right, Jun 19th, 2007 @ 7:42am

    I agree

    Patience and time.. in a year I raised my score over 100 points. Just had to quit being college stupid

     

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  6.  
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    Kyle, Jun 19th, 2007 @ 9:07am

    I am sure there are some people with horror stories of the credit bureaus mistakes and how their FICO score kept them from getting loans because of this, but guess what? That doesn't happen a lot.

    You'd be surprised at how inaccurate the reporting agencies can be.

     

    reply to this | link to this | view in thread ]

  7.  
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    Carmelo Lisciotto, Jun 19th, 2007 @ 9:25am

    piggybacking

    I never really understood the benefit of piggybacking?
    Carmelo Lisciotto

    www.carmelolisciotto.com

     

    reply to this | link to this | view in thread ]

  8.  
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    Anonymous Coward, Jun 19th, 2007 @ 1:21pm

    Re: Why is it FICO's fault?

    That is the problem with this country, no one is willing to work hard to get what they want.
    Sounds like you're talking about bankers making money off other people's money.

     

    reply to this | link to this | view in thread ]


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