Credit Repair 4 Dummies Newsletter

Consumers with below average credit scores are able to short-cut the credit rebuilding process, which is normally quite lengthy, by an increasingly popular method known as piggybacking. Basically, under this practice someone with poor credit can be added on as an additional user on a credit card owned by someone with exceptional credit. It is, in essence, the same thing as when parents add their children to their own cards to help the child establish credit.

For the cost of about $2,000 it is possible to rent slots as additional users on the credit card accounts of three consumers with exemplary payment histories. Nearly instantaneous increases of more than two hundred points have been reported. This makes the initial outlay well worth it, as several times that amount can ultimately be recouped by much lower costs on big ticket loans, such as automobile or mortgages.

The process works because when the computers see the new accounts that have been added to the consumer’s records it factors in the payment history, which is always exceptional, of the rented accounts. This has an enormous benefit to the renter’s score.

Fair Isaac Corp is the creator of the FICO scoring system. They claim that they will change the way they calculates credit scores later this year. Fair Isaac assures us that their new calculating process will eliminate this obscure loophole.

The mortgage loan industry is in a quiet uproar over the growing practice, which is understandable. From their point of view they are providing mortgage loans to individuals with highly inflated credit ratings. Not only do mortgage lenders supply loans to borrowers they would ordinarily deny due to a high risk factor, but the interest rates that these loans are established with are much lower than they would be, due to the fact that interest rates are proportionally tied to the borrower’s credit score. This translates to vast savings to the borrower at the expense of the lender.

Federal agencies have not made a final judgment, yet, on the legality of this practice, so for right now there is a short cut to credit repair that would-be borrowers can avail themselves of. To date there has been no official announcements, but, it is understood that the mortgage industry is taking action to contend with credit card piggybacking. It is thought that by 2008 this shortcut will be all but nullified.

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