We talk a lot about the use of Trade Lines and we also hear a lot about Trade Lines, the use and the legality. We thought it might be helpful to answer some of the commonly asked questions that come up in person and on our radio show.
Trade Lines are considered ‘Piggy Backing’, as you are essentially piggy back riding on another’s good credit in order to increase your own score. The most common question asked is: are they are legal? The answer is yes. It is also worth noting that banks do not like Trade Lines because they are a manipulation of ‘the system’.
Thomas J. Quinn the VP of Scoring Solutions for Fair Issac (FICO) stated: ‘After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user trade lines present on the credit report’ Fair Issac (FICO) indicated at one point that they would ‘end the practice of piggybacking’ but it did an about face and still recognizes them.
We often refer to Trade Lines as ‘Training Wheels’ which is how we prefer that you view them as well.
We utilize Trade Lines to assist our customers that have no score or a ‘thin credit file.’ While FICO and others recognize Trade Lines, lenders are not recognizing them as a true representation of your credit history and in order to get a home loan you will need to be able to produce solid Trade Lines that are, in fact, your own, which is exactly why we put them in place.
What we are doing, with great success, at CRN, is taking people with little or no score and adding Trade Lines, this allows them with an opportunity to qualify for items that they otherwise would not have been able to do without the Lines. We have a number of customers who have been able to purchase cars and secure credit cards among other things as a result of adding Trade Lines to credit profiles..
Once the Trade Lines are added to your account, we encourage you to apply for a car or credit card, or other approvals that you are seeking. The goal is for us to get you up and running (the training wheel concept) and once you have secured credit in your own name, we remove the lines and let you go at it on your own. It goes without saying that you need to treat your new found GREAT CREDIT with kid gloves.
You do need to understand, however, that ‘authorized user’ Trade Lines will not help you in purchasing a home. You are NOT a candidate if you have no positive Trade Lines that actually belong to you if you are trying to secure a mortgage. Our advice for you if you are in this position is to let us add Trade Lines and begin to get credit in your own name (new car, credit card or other positive credit). Those new accounts need to ‘season’ for 6-8 months. It is important to take slow and methodical steps to work through the process and not rush and risk a denial. You can apply for a mortgage after the new accounts have seasoned.
We have a group of investors that have allowed us to use credit cards acquired in their names to assist our customers.
If you have any questions about whether Trade Lines will work for you, you may reach us at 702-778-2000.
