The Center For Debt Management
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Seasoned Trade Line:
Piggybacking

A seasoned trade line (also called Piggybacking) is a method of allowing strangers with bad credit to become authorized users on a credit card account of someone with good credit, for a fee. (Disambiguation: Mortgage lenders may refer to seasoned trade lines as well, but this means lines of credit which the borrower has had for a long period of time - usually at least 2 years - to indicate that the potential borrower is creditworthy by consistently paying bills on time, and is different than "piggybacking").

The benefit to the person with bad credit that they now have an account with excellent credit history listed on their credit report, thus raising their credit score. This may cost from $500 to $2000 depending on the credit history of the new account.

The person with the good credit receives from $100 to $150 for this, with the rest of the money going to the middleman.

The risk to the "donor" is that the other person may actually charge the credit card account, and not pay it back. The brokers who provide the service claim that they never provide the entire account number to the recipient, however they may find it out anyway because this number may appear on some credit reports.

Legality

FTC spokesman Frank Dorman said: "What I've gathered from attorneys here is that it appears to be legal technically, however, the agency is not saying that it is legal."

However the practice can be fraudulent if, as required by the contract, a borrower does not disclose pertinent facts relating to his ability to pay back a loan.

Industry Effects

Fair Isaac creator of the widely used FICO score has announced that they will no longer take into account Authorized Users in determining a credit score.

This will stop the practice of seasoned trade lines, but it will negatively affect students who use their parents cards and spouses with little credit history of their own.

Because of the Fair Credit Reporting Act and privacy laws there is no way for a lender to be able to tell who the other party of an authorized account is, and thus no way to distinguish legitimate use from fraud.


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