19 Feb 2014

Can you get funding with just authorized user tradelines?

Well, it depends what kind of funding, but… generally, the answer is no: You cannot be approved for loans with only authorized user tradelines on your file. There’s a few reasons why:

Underwriting procedures outweigh mere credit scores.

Suppose we added three relevant tradelines to your credit report, your scores shot up to the 800s and you walk into a bank and submit an application for a mortgage. The bank would be foolish to issue a loan on that basis, alone. For example, do you have a job? That is, can you pay back the loan? In other words, you cannot pay back a loan with a good credit score. Therefore, most banks won’t lend to those with only a good credit score. There are exceptions to this rule, actually. For example, FHA has no tradeline requirement, what-so-ever.

Generally, though, credit approvals require more than good credit scores. Nevertheless, if you have the underwriting requirements, you’re going to have access to better loan and funding products with a good credit score (from adding positive tradelines) than if you did not. You’ll also likely reduce your interest rates.

Primary tradelines are often required.

In addition to the underwriting stuff above, there is a “two tradeline minimum”  for mortgage. In this case, authorized user tradelines do not satisfy this requirement. So, unless you have two of your own (or “primary”) tradelines, adding authorized user accounts to increase your credit score is useless for securing that mortgage. This is why some tradeline companies lie to you and advertise: “we have primary tradelines for sale.” They don’t. No one does.

Lenders are smart and balance the issues well.

You’re not going to load up a credit report and walk away with cash… it’s isn’t going to happen. If you have a legitimate need, ability to repay, with collateral and you have a reasonable amount authorized user accounts to boost your credit scores, you’ll be fine. Here’s Fannie Mae’s underwriting guidelines for authorized user tradelines:

authorized users only for loans

As you can see, they use their brain and – so long as you’re not abusing the process – they will determine that “the [authorized user] information reported on the credit report is an accurate reflection of the borrower’s credit history.”

So, you can purchase seasoned tradelines, but the idea of seasoned “primary” tradelines is nonsense (and impossible, by the way). You can get trade lines free by asking a friend or family member to add you as an authorized user. If you want professionals to help you with it, then give us a call.

3 thoughts on “Can you get funding with just authorized user tradelines?”

  1. Matt,

    I’ve notice that most of my answers start with “it depends”, and if I’m getting tired of hearing it, I think our visitors do to. However, it depends. ?

    I will note that having nothing on your file is a good thing. A lot of people around this Country would love to be in that situation.

    So, why does it depend? Well, it depends on what kind of funding you intend to get. For example, let’s say you are trying to get funding for a business. If you add tradelines to your file, unquestionably your scores will increase drastically (with a thin file). With high scores, you could personally guarantee lines of credit for your business (provided your income or your company’s income is sufficient). As another example, let’s say you’re trying to get a mortgage. Well, in some cases (actually, in most cases, these days), lenders require at least 1 to 3 personal lines of credit… lines of credit that have been in your name only for at least 12 months. This is not to say authorized users don’t help, in fact, they will increase scores and get you into more favorable rates. However, unless you have those primary accounts, the lender will not care if you have an 800 credit score.

    So, the answer to your question is completely circumstantial. If you want to provide more details here, I’ll respond. Since this will get into personal details, I’d recommend you give us a call so we can discuss your credit goals thoroughly.

    Thanks,

    1. Yours is a very informative altrcie. It really piqued my interest in several areas. I agree with many of your points and am further reviewing this information. Thank you for making your information so interesting.

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