No more piggybacking loophole - Apex credit "No comment"

Beware of credit score fixers
Promises to raise your credit score unlikely to pay off

Kayce T. Ataiyero | Consumerland
February 3, 2009
With lenders becoming stingy and setting the credit bar higher, having an attractive credit score is more important than ever. So, who could resist a pitch like this one from an online credit repair service: "See you in the 700 Club!"

For a fee, the company promises to deliver you from the credit sewer, boosting your score to the 700 level, the land of low interest rates and financial affirmation.

Sound too good to be true? Maybe so. Many people would think there's only one old-fashioned way to boost a credit score, and that's by being responsible. Pay off your bills, on time, and don't bite off more credit than you can chew. That's what independent experts preach.

Yet the consumer world is filled with offers from firms promising to help clean up your poor credit score, and the story of how the "700 Club" pitch has succeededâ??until nowâ??reveals the complexity and diversity of the credit repair business, which the Federal Trade Commission, for one, criticizes.



Kayce T. Ataiyero
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The idea behind the "700 Club" is ingenious in its own way. Courtesy of a legal loophole in the credit reporting system, companies can charge a fee to match up consumers who have poor credit scores with those with stellar scores, allowing a perfect stranger to ride the good credit coattails of others.

The phenomenon, known as "piggybacking," or trade line renting, exploded a few years ago when Internet entrepreneurs figured out there was money to be made. The premise relies on the same principle that allows someone to add a spouse or child to their credit line. A company recruits "investors" with good credit willing to sell slots on their credit lines. The company then sells those lines to strangers in need of a credit score boost, splitting the profits with the investor. The person buying the line of credit doesn't have any charging privileges; they're paying simply for the right to benefit from the credit history of the seller. The prices for such services vary on how much credit history you're looking to buy.

Many in the lending industry consider this type of credit repair unethical because it misleads lenders into thinking a person is more creditworthy than he or she actually is.

Careen Foster, director of scoring product management for Fair Issac, the company responsible for calculating your credit, or FICO, score, called the practice an "illicit manipulation" of the credit reporting system.

And so now this ride may be coming to an end.

Last week, Fair Isaac announced it has revamped its model for calculating credit scores, and one of the changes it made will shrink the piggybacking loophole, while allowing legitimate credit users to benefit from being added to credit accounts. One of the big credit report agencies, TransUnion, has already begun using the new FICO score.

Foster said the new FICO rules don't eliminate the possibility of piggybacking, but come close enough. Fair Isaac said that instead of waiting for regulators to address the issue, it decided to act on its own.

"The practice of adding an authorized user account from an unknown third party to your credit report isn't going to have the same impact, nowhere near the kind of benefit that folks are paying for," Foster said. "I don't think it will be worth the cost of the trade line renting to do it."

And that could be bad for business for some of these credit repair shops.

I set out to find some of the companies. One, Instant Credit Builders, advised on its Web site: "We are no longer offering Trade Lines however we will be servicing existing clients." There was a number for existing clients to leave messages. I called it. A robo-message informed me that the mailbox did not exist.

Next, I called Apex Credit Services, which was advertising on its Web site 2-year-old trade lines for $399. Ten-year lines were going for $899. An affable man answered and we chatted for a bit about the FICO changeâ??he said he didn't know anything about it. He also said the company owner wasn't interested in commenting.

After calling or e-mailing more than a half-dozen companies, I was starting to think no one wanted to talk to me, until Marcus Vance called me back. Vance works at Crcleanup.com, a company that sells piggybacking services. This was the one offering entrance to the 700 Club. Or at least it did. He said the FICO changes will put the company out of business.

I asked Vance if he thought his service amounted to defrauding lenders. He said he was just participating in a system that has long set up consumers to fail by pushing credit on them at an early age, only to penalize them for years for the poor financial decisions they made. He said people come to him when they realize that it would take them 15 years to boost their credit scores to a level his company can reach in mere months.

"When you turn 18 in college, they bombard you with credit cards," he said. "They put you on a plank and let you jump off. All we do is give people an opportunity when they get a little bit older and wiser to fix their credit."

Vance put it this way: "Basically, there's a loophole and we're taking advantage of the loophole. It's the American way."

While this strategy appears to be on the way out, there are plenty of other companies out there offering to help repair your credit. The FTC, however, advises consumers to be wary of any company that promises to make all your credit troubles disappear.

Anything a credit repair clinic can do legally, you can do for yourself at little or no cost, the FTC says on its Web site. No one can legally remove accurate and timely negative information from a credit report.

The bottom line: "You can improve a credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan."

 

Next, I called Apex Credit Services, which was advertising on its Web site 2-year-old trade lines for $399. Ten-year lines were going for $899. An affable man answered and we chatted for a bit about the FICO changeâ??he said he didn't know anything about it. He also said the company owner wasn't interested in commenting.

After calling or e-mailing more than a half-dozen companies, I was starting to think no one wanted to talk to me, until Marcus Vance called me back. Vance works at Crcleanup.com, a company that sells piggybacking services. This was the one offering entrance to the 700 Club. Or at least it did. He said the FICO changes will put the company out of business.

 

It should be obvious. I don't want people in need to get scammed out of their money. I told you over a month ago that piggybacked tradelines were being phased out. You all asked for the proof. I've provided it. I could care less about Apex, except it appears, by looking at his prior posts on the subject, that he deliberately lied about his product to milk as much money out of people as he could. Maybe he was just ignorant? The End.

 

ttt so nobody wastes their money.

 

Thanks for assuming I'm an executive of some kind. That is flattering! I actually sell time shares. Thanks for bumping the thread!