Read it here first: Borrowing FICO Scores


Back in April, we discussed the unusual lending-related practice of "borrowing" someone else’s credit-worthiness. (Go FICO Yourself: Selling Your Credit Score).

Now, the mainstream media has finally gotten around to discovering this less-than-savory part of the lending laws.

Here’s a quick excerpt:

"Only a low credit score stood between Alipio Estruch and a mortgage to buy a
$449,000 Spanish-style house in Weston, Fla., a few miles west of Fort

Instead of spending several years repairing his credit rating, which he said
was marred by two forgotten cell phone bills and identity theft, the 37-year-old
real estate agent paid $1,800 to an Internet-based company to bump up his score
almost overnight.

The result was a happy ending for Estruch, but the growing practice is
sending shivers through the mortgage industry. Federal regulators are also
reviewing the practice. And after being contacted by The Associated Press for
this story, Fair Isaac Corp., the developer of the widely used FICO score, said
it will change its credit scoring system beginning later this year in a way it
contends will end this little-known but potentially high-impact mortgage loan
loophole., or ICB, helped Estruch boost his score by
arranging for him to be added as an authorized user on several credit cards of
people with stellar credit who were paid to allow this coattailing. Parents also
use this practice when they add their children to their credit cards to help
them build solid credit.

The pitch to those who are essentially renting their credit history for pay
is seductive: You don’t need to worry about users of this service receiving
duplicate copies of your credit cards, account numbers or any of your personal
information. It’s essentially free money, they are told."

The entire article is worth the read . . .


‘Piggybacking’ Roils Credit Industry
J.W. Elphinstone
AP, Sunday June 3, 6:57 pm ET

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What's been said:

Discussions found on the web:
  1. michael schumacher commented on Jun 4

    Sounds alot like the financial aid problems of the early 80’s. You had waves of foreigners coming here to go to school and the only way to get financial aid was to have a social security number.

    Waves of people went to school on another person’s SS# as there was no way of really confirming if the person was who they said the were. (remember pre-internet and actual ethics and morality were a bit more prevalent)

    The SS# has now been replaced with the G.I. Bill as schools play the game to acquire more students and their precious gov’t money. There is wholesale abuse in the financial aid sector as well as the mortgage business.

    i could tell you stories about Master’s Institute, Micro Skills, and other post-secondary schools that are largely funded by the G.I. Bill payments.


  2. Michael Donnelly commented on Jun 4

    WTF? This is legal? If this isn’t late cycle desperation I don’t know what is.

  3. Christopher Laudani commented on Jun 4

    Another brilliant use of the net – perpetuating mortgage fraud!

  4. j d ess commented on Jun 4

    i don’t see it as late-cycle desperation. i see it as early- to mid-cycle (if short lived) technological innovation. someone just had the “eureka” moment recently instead of five years ago.

    how widespread is this, though? will this feed into the coming (supposed) contagion?

    a question about the guy making $2500/month off this: is his score affected if a mortgagee who used his ID defaults?

  5. jkw commented on Jun 4

    I thought they were going to go after the other way of boosting credit scores. I’ve never tried this (I have good credit anyway), but I’ve read that if you dispute something, the credit reporting agencies have to remove it from your credit report until the dispute is settled. So you can dispute everything bad on your reports about a week before you need a good credit score and it probably won’t be resolved in time to be put back on. I’ve also read that if you dispute enough times, eventually your creditors will fail to fill out all the paperwork properly to kaap bad things on your report.

    How are they going to separate authorized users that actually use the credit from authorized users that are just on there for the score boost?

  6. Contrarian commented on Jun 4

    Is there any credit reporting agency that doesn’t have some skeletons. First, it was the constant proportion debt obligations (CPDO) from S&P and Moodys. Now we see that FICO is crap.

  7. S commented on Jun 4

    After reading the full article, I decided to go the the website to snoop around.

    The site was dull looking. Mostly text. And yet the server response was incredibly slow.

    Business must be good.

    I bet the guy who started it is going to make a fortune before the practice is outlawed or rendered obsolete by new technology.

  8. Emily commented on Jun 7

    Did you see the recent FICO announcement about stopping this piggybacking scam? They’ve decided to change their credit scoring algorithm to no longer factor in authorized user accounts. This is major news because they hardly ever change the formula.

    The scoring change should stop this credit repair scam, but it could also cause a major credit score drop for about 30% of the population. Former FICO score insider, dissected this issue online here –

  9. t smith commented on Jun 19

    I’m a loan officer and I see the hoops lenders put sub prime buyers through. Most people don’t know that FAIR ISSAC or what I call UNFAIR ISSAC has 88 factors that can negatively and only 6 factors that can affect your credit postively (IS THIS FAIR). Have you asked your self why 1 month late payment can cause your score to drop thats the reason. One can have 10 years of on time payments and one 30 day late and loose 50 points is this fair. How can a 120 months of good credit be hurt by 1 month bad. Have you ever thought of who really benefits from this –CREDITORS. First it was UNIVERSAL DEFAULT now its AUTHORIZED USERS what will be next. THe credit bureaus work for creditors they get 8 to 12 dollars every time someones credit is pulled miillons of times a day all over the US. Why would they do anything to help the public. Now that the little guy found a way to help himself lenders have stepped in. Why don’t lenders make the bureaus work faster to correct wrong information or identiy theft on reports –they love high interest. This is going to effect millions of people immediately. AMerica should be outraged with FAIR ISSAC –the modern day thieves. A NON-REGULATED industry that effects the whole Nation negatively. Ask your self who do they answer to NO ONE but lobbyist of the lenders. BE AFRAID VERY AFRAID

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