Credit Renting - Loopholes in Credit Reporting Algorithms
My sister Shannon pointed me to this Daily Herald article about an industry that’s taking advantage of loopholes in the credit reporting algorythyms. The article tells how Instantcreditbuilders.com helped Alipio Estruch raise his credit score over 150 points in 3 months by adding him on the accounts of several “credit renters”.
Credit renters are people with good credit scores and long payment histories who charge a fee to have a person temporarily added to their accounts, lending them credibility that can save 100s of thousands of dollars over the course of a 30-year mortgage. Credit renting obviously becomes dangerous for lenders AND borrowers when the borrowers begin to bite off more then they can chew. Still, it will certainly appeal to some –especially given the recent changes in the subprime lending market.
No doubt the 3 major credit reporting agencies will be all over this soon, but the “credit faking” industry will certainly adapt with them. At any rate, this is the first time I’ve seen black hat techniques being used institutionally in the credit industry. This could get interesting.
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Tags: Black Hat, Business, Credit Renting, Credit Scores, Economics, Subprime Lending
June 6th, 2007 at 10:06 am
Interesting post, Jordy. I had never heard of this before.