Tradelines, in general.
We wrote over 3,000 words on tradelines, in general, which you should read. This page, of course, is about tradelines which you can buy in order to increase your credit score.
It might be helpful to explain what tradelines are in a few sentences.
- Tradelines are accounts in your credit report. If you have good accounts (i.e, “tradelines”), you’ll have a good credit score.
- Obviously, the opposite applies. That is, if you have bad accounts in your credit report, you’ll have a bad credit score.
In order to get accounts, you have to apply for credit and be approved for credit. For example, applying for and being approved for a credit card. Once that credit card shows up on your credit report, that’s a tradeline. If you pay on time, your credit score will increase as your credit behavior is proven. If you miss payments or max out the account, your credit score will go down.
This takes time, which most of us do not have.
Thankfully, there’s a shortcut.
Parents can add their children as authorized users on to their credit cards. The children benefit from this because the established history of the credit card appears on the child’s credit report, which shows the full history of the account. As a result, the child’s credit scores shoot through the roof (as if the child had opened, established and paid on time for all of those years). This is called piggybacking.
Now, here’s the trick.
- It makes no difference whether the parent adds his or her child or a perfect stranger. That father or mother with the credit card can add anyone they want onto their credit card as an authorized user.
- You can pay to be added as an authorized user on someone else’s aged (or “seasoned”) account (or “tradeline”).
This is called tradelines for sale.
Commercialization of tradelines for sale.
Although the process is outlined above, there are some gaps in the story.
- How do you find people to add you onto their credit card?
- How does the cardholder find people to add?
- How is this process commercialized so as to protect the parties involved through a broker?
In other words, how is this process put together so that anyone (not just the son or daughter of a wealthy person) can benefit from such an arrangement? Well, the practice of piggybacking credit has become as common as credit repair. There are companies who organize and connect the cardholders and the consumers seeking to improve their credit scores through this method.
Let’s back up just a bit. Let’s put this in context with a quick note on the history of the practice.
A quick history.
The practice of piggybacking credit has existed since 1974ish. It is made possible by a law that was signed into law that year called the Equal Credit Opportunity Act of 1974.
“The Federal Reserve’s Regulation B, which implements the 1974 Equal Credit Opportunity Act, requires that information on spousal authorized user accounts be reported to the credit bureaus and considered when lenders evaluate credit history. Since creditors generally furnish to the credit bureaus information on all authorized user accounts, without indicating which are spouses and which are not, credit scoring modelers cannot distinguish spousal from non‐spousal authorized user accounts. This effectively requires that all authorized user accounts receive similar treatment. Consequently, becoming an authorized user on an old account with a good payment history, may improve an individual’s credit score, potentially increasing access to credit or reducing borrowing costs. As a result, the practice of “piggybacking credit” has developed.”
Finance and Economics Discussion Series
Divisions of Research & Statistics and Monetary Affairs
Federal Reserve Board, Washington, D.C.