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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.
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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. 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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Re: Why is it FICO's fault?
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I agree
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You'd be surprised at how inaccurate the reporting agencies can be.
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piggybacking
Carmelo Lisciotto
www.carmelolisciotto.com
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