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)


Edit Your Comment

  1. Antediluvian says:

    So, I can make money by allowing pathetic strangers to piggyback on my good credit?

    Where do I sign up?

  2. nweaver says:

    Uhh, can’t Fair/Isaac look in, oh, say, the HISTORY on the credit report, detect it, and not count these accounts?


  3. JustRunTheDamnBallBillick. says:

    Those dirty mortgage brokers, out there screwing the purely innocent customers…


  4. JustRunTheDamnBallBillick. says:

    Thats not to say that this isnt a good way to help a child or sibling gain credit. Adding your child or younger sibling to your credit (assuming you pay it) will allow them to build a credit history while avoiding them having to take one of those horrible no-credit offers, like the $300 citi cards with the huge fees. If you can put a 16 year old on a 4 year car loan and a credit card or two that is paid regularly you will discover they have a credit score of 700+ coming out of college, which will give them a great head start in life.

  5. ShortBus says:

    @nweaver: FICO doesn’t have a “history”, it’s a summary of your credit report at any given point in time. Your most recent credit file is pulled, run through a super-secret formula, and all the information in the credit report is summed up into a single number that tries to guess how likely you are to pay your bill.

  6. UnStatusTheQuo says:

    Sounds to me like a great way to get back at an unfair system in the first place.

  7. SadSam says:

    how do these companies add names to other people’s loans without authorization?

    If there was a way for the original person holding the loan to authorize and profit from it, I’d be okay with it.

  8. Noah_Bodie says:

    FICO 08 changes still have not been implemented. Do a google news search, and you’ll see, if the stories are correct, Equifax doesn’t plan to implement FICO 08 until a lawsuit between them and Fair Isaac is resolved.

    Dipwad lenders could simply stop reporting AU accounts, but they ain’t gonna do that even after FICO 08 is implemented. For you see, while an AU has no responsibility to pay on a debt, the lender will still report it on the AU’s credit report in an effort to coerce them into paying.

    Net effect is that lenders won’t give the AU the benefit for the TL on their credit report while the account is in good standing, but they sure as poop wanna collect once the account goes into default.

  9. Amelie says:

    That gambit no will no longer work.
    “Credit bureaus are expected to adopt a new version of the widely used FICO credit score this year that will no longer benefit so-called ”authorized users” on another person’s credit card account. It’s common for parents to add a child as an authorized user on their credit card to boost the child’s credit score. That benefit will no longer exist under a new scoring model by Fair Isaac Corp., the company that developed the FICO score. You can still be an authorized user, but Fair Isaac will no longer factor authorized-user accounts into its credit-scoring formulas.” []

  10. SacraBos says:

    So private companies (Group A) are complaining that other private companies (Group B) are reverse engineering how the trade-secret FICO scores of other private companies (Group C) work, and using that to provide improved goods and services to their (Group B) customers keeping them (Group A) from gouging them with higher interest rates?

    Is that about right? That is what they are complaining about, isn’t it?

  11. MercuryPDX says:

    The original borrower is unaware that a new name is being attached to the account, he said.

    This is BS. If someone’s going to rider on my good credit, I want a cut. I wonder if there’s anyone you can tell if this has happened and cook the goose of the person that’s tagged on.

  12. Charles Duffy says:

    @UnStatusTheQuo: “The system” tries pretty hard to be fair — if FICO scores weren’t the best available predictor of creditworthiness, banks would be using something else. Where, specifically, does it fail?

  13. Charles Duffy says:

    @sacrabos: …and using them to assist Group B in making material misrepresentations towards Group A in establishing financial transactions.

    This treads mightily close to fraud.

  14. theutopian says:

    I’m all for people gaming the FICO system. I resent the fact that my value as a human being as been reduced to a computer algorithm.

  15. revmatty says:

    @theutopian: Hey let’s not get all crazy now. I’m first in line to criticize the financial services industry as being shadier than all get out at best, but they aren’t reducing your value as a human being in any way. They are simply reporting what they believe to be the likelihood that you’ll pay your bill if someone loans you money.

  16. gingerCE says:

    Will this still work when you piggy bank onto your parent’s perfect credit? Does it matter if you’re in college?

  17. SacraBos says:

    @Charles Duffy: “Best available predictor” != “Best predictor”. There are several actions that you can take that have no bearing on your creditworthiness that can lower your score. For instance, close all your oldest unused credit cards, and your score will go down. Does closing an account make you less credit worthy? No. So why should your score go down? The fact you can negatively effect your credit score doing things that should be positive (or at least neutral) is why it’s a flawed system. They can leverage FICO to intimidate you into not closing unused accounts.

    Move all your debt into a newer low interest credit line, and cancel the rest. Your score drops. Yet you are actually more “credit-worthy” in terms of financial responsibility. But your are less “credit-worthy”, since you are a more “fickle” (read: savvy) consumer, I guess. Again, FICO benefits the creditors over the consumer.

    Add the recent “universal default”, where a falacious or disputed action with one creditor can jack your rates with all your creditors (Oh yeah, and they don’t automatically go back DOWN once it’s resolved). This gives further reason why consumers need to be able to game the system the same way creditors have gamed it for themselves.

    This isn’t FICO fraud, this is an indication that FICO is imperfect and a “better available predictor” needs to be found. But it should be noted that it’s being looked at not because FICO is screwing the consumer, but because some creditors think they are being screwed.

  18. NotATool says:

    Gaahh…the idea of someone in financial dire straits, paying $1,400 to game the system so that they can drive themselves further into debt…

  19. aka Cat says:

    @mercurypdx: I’d rather go after the company that’s arranging the tagging. As you said, if somebody’s getting a boost from my credit score, I want a cut. *I’m* the one with the valuable commodity, not TradeLine.

  20. Noah_Bodie says:

    If one had $1,400 to spend on credit repair, bank that $1,400 and start reading on

  21. SacraBos says:

    @CatMoran: If there’s any fraud, this is where it is. Not with any FICO impact. If I get a cut of that $1,400, I’m all for it. If not, what’s this stranger doing on my account?

  22. Cameron Fredman says:

    Still waiting for an answer to Antediluvian‘s question. Where do we sign up to share positive loan history with those in need (for fun and profit)?

    @sabine: It no longer will work to be merely an “authorized user,” but having a second name on the account will still work. The downside is the person getting the credit-rating benefit now assumes liability on the debt as well, but if it’s your kid, that might not matter.

  23. Tracy Ham and Eggs says:

    @sabine: I was actually talking about adding them at the start. I put my baby bro on my car when I bought it as a co-borrower. Same with credit cards. FICO08 is supposed to stop people who were adding multiple authorized users (who had no obligation to pay)to loans to give them longer histories. Coborrowers would be responsible for a debt if the borrower defaults, but can then accrue credit history.

  24. brokeincollege says:

    Apparently, paying your credit cards off every month makes you less credit worthy. The only thing that makes you is less profit for the credit card companies. It actually makes you more creditworthy, since you’re, like, responsible with your money.

  25. MercuryPDX says:

    @CatMoran: Hrmm… I figured if you burn enough of their customers, they’ll go after the companies with a lawsuit.

    I doubt the company would be stupid enough to put something like “JOHN SMITH added to loan by FICOFIXERS.COM, INC.”.

  26. econobiker says:

    and brokeincollege:

    Yeah, they want the people who take on more debt but actually pay enough to pay fees/interest but do not pay off at the end of each cycle.

    Other companies use this formula too. Progressive insurance uses a credit score to help them charge more to people who would make more claims.

    Basically Progressives’ risk department told me that they consider people without lots of credit higher claim risks since these credit “cheap” people are more likely to make a claim than fools with lots of credit cards who may not make claims due to them being used to paying….

  27. SacraBos says:

    @econobiker: That’s pretty much what I thought. FICO isn’t a credit-worthiness scale, but a how likely are they to make lots of money off you.

    Of course, that why if you have a high FICO score you get LOTS of pre-screened credit card offers. It is profitable for them to lend you money. [] is your friend in this case! You can have tons of debt, but as long as you still make payments, they’ll still keep offering you more.

  28. ill_mango says:

    I don’t really see how this is fraud. The credit unions are the ones who are aggregating and using this data, not the consumers. If they want to keep their magic number accurate, then the onus is on them to ensure that their data is good. It’s not up to consumers who are doing something perfectly legal to not do something just because it messes with the system.

  29. Tracy Ham and Eggs says:

    @econobiker: @SacraBos: You are both way off.

  30. Mr. Gunn says:

    People will get screwed by unintended effects of the extremely closely guarded, trade-secret algorithm because it can’t be perfect. It’s just a question of who, the creditors or the borrowers. Sounds to me like the inappropriate score-lowering effects of closing old accounts, shopping around for the best deal on a loan, etc, should be balanced by score-increasing loopholes,it just sucks that it costs money if you don’t know anyone that will do it for you.

  31. anatak says:

    “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.”

    $1400 to maybe, kinda not take responsibility for your own stupid decisions. Grow up.