It's Still Possible To Game Your FICO Score By 100 Points Or More

For about $1400, you can raise your FICO credit score by 35 to 40 points through companies like TradeLine Solutions, writes the New York Times. Lots of subprime mortgage holders are turning to these companies in a last ditch effort to game the FICO system, in order to avoid rate adjustments that might send them into foreclosure. Of course, knowingly misrepresenting your credit score might count as loan fraud, points out a FICO representative.

Fair Isaac adjusted its FICO scoring system for 2008 so that it now prevents one of these score-enhancing techniques—you can no longer bump up your score by adding your name as an “authorized user” to a stranger’s perfect credit account. But the new techniques still work, which really annoys not only FICO but the National Association of Mortgage Bankers.

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.

Right now, the service TradeLine offers is technically legal, and the practice falls into a gray area as far as consumers are concerned. FICO wants to make it clear that it should be illegal, but the FTC remains neutral on the matter:

He emphasized in an interview that [FICO] is not a law enforcement agency, but would bring concerns to the attention of the Justice Department, Federal Trade Commission, the F.B.I. and attorney general’s office if lenders started complaining about such practices.

The F.T.C. and other federal agencies declined to comment on the programs or to say whether any investigations were under way.

“Investigations are nonpublic and we don’t opine over whether something is legal or not,” said Frank Dorman, public affairs specialist with the F.T.C.

“What’s Behind Those Offers to Raise Credit Scores” [New York Times]

“How FICO 08 Changes Your Credit Score”
(Photo: Getty)