What’s Behind Those Offers to Raise Credit Scores
Excerpt:
For a $1,399 fee, TradeLine adds the borrower’s name to a stranger’s recently paid-off loan just before the account is closed. The account, with its perfect payment history, is then added to the borrower’s credit record in 30 to 45 days.
Ted Stearns, chief executive of TradeLine Solutions, said he came up with what the company calls its “seasoned primary accounts” program using a “loophole” in the law. Adding a single account can raise a credit score by 35 to 40 points, he said. But most clients purchase three accounts, at $1,399 for the first one and slight discounts for subsequent ones, to increase a score from say 560 to 700, he said.
The program’s concept, he said, is similar to someone’s buying a car and taking over somebody else’s car loan or lease account at the time of purchase — except, in this case, there is no balance on the account. The original borrower is unaware that a new name is being attached to the account, he said. Mr. Stearns defended his program. “I am a legal entity that conducts business throughout the state of California and the entire continental U.S.”
But Craig Watts, consumer affairs manager at the credit analysis firm Fair Isaac Corporation, said the program raised red flags.
“They’re falsifying the person’s credit history, and that’s one definition of loan fraud,” Mr. Watts said. Even if TradeLine has found a legal loophole to offer the program, the people using the program are knowingly raising their credit scores artificially when applying for a loan or refinancing, he said, adding, “If the borrower is deliberately misrepresenting himself and his credentials to the lender, that’s loan fraud.”
Comment: This legal “loophole” is fraud!
