February 4, 2010
"Fair Isaac has decided to include consideration of authorized user tradelines present on the credit report in the FICO 08 model," Tom Quinn - VP, Fair Isaac Corp. Read FICO's full testimony given to a Congressional subcommittee focused on credit education. This is the one they are desperately trying to hide…CONGRESSIONAL TESTIMONY.
April 30, 2010
While this business model WAS considered to reside in a legal “gray” area, the fact is simply that a lot of banks and mortgage lending institutions are upset with it because our service gives power back to the people to acquire the financing they need at affordable rates. Furthermore, the Federal Trade Commission – tasked with regulating the credit industry - and the Attorney General – responsible for the safety of consumers – both seem to agree with BoostMyScore.NET, as they have audited our company and business model and found us to be operating completely within the realm of the law.
To help you understand a little more about credit piggybacking, it is important that you understand the history of lending in this country.
Banks and lending institutions have become incredibly lazy during the past 20 years and have been incentivized to underwrite loans as quickly as possible in order to reduce their labor costs and to speed up the overall loan process. To help them accomplish this goal of expedient underwriting, the banking industry has employed the use of a “credit scoring utility” – called the FICO Score – which is a simple computer software program designed to “read” an applicant’s credit report and produce a 3 digit number between 300 and 850 to define the likeliness they will repay the loan according to the agreed terms. This new “technology” drastically reduced underwriting approval time, but at a great cost to the lending system overall. In adopting this credit scoring system, banks have abandoned traditional methods of underwriting, like verifying employment, income, assets, and the simple ability for an applicant to repay a loan – a practice that led to so called “liar loans” in the mortgage industry, which have been almost exclusively blamed for the housing crisis our country has been burdened with, as of late. As you can imagine, the scoring system is having negative impacts in other areas of lending, as well, such as credit cards and business loans. The effects on those two sectors are only recently being realized and will continue to reduce our economy’s ability to rebound. To understand how one little piece of software could have such a harrowing impact on an entire country, you need to understand how it works, and how it fails.
Firstly, the scoring model was, and is, incredibly flawed. It is based on credit reports which are also incredibly flawed – it is well documented that over 70% of all Americans have incorrect information reporting on their credit files. It is also a known fact that over half of those reports contain incorrect information bad enough that it would cause a lender to decline an application for approval, or worse, approve it at a higher interest rate, giving the bank the plausible excuse to charge the applicant an unfair interest rate that does not correctly reflect the risk associated with granting an approval on a particular loan; thereby unfairly increasing the profits for the bank at the expense of the borrower.
Secondly, the credit reporting industry is notoriously difficult to work with in trying to correct misinformation, when doing so benefits the consumer. They use every technique available to them to make certain the credit reports they sell to the banks – private information about American citizens taken without the permission of those people – is incredibly difficult to correct, thus punishing unscrupulous borrowers for negative actions they were not responsible for – like a late payment on a credit card that belongs to someone else with a similar name, or identity theft.
Thirdly, those that sell the credit scoring model have been able to infiltrate industries outside of banking. In order to acquire car insurance, home owner’s insurance, or life insurance, you must have a good credit score, or you will be forced to pay higher premiums. In order to rent a place to live, the landlord will most likely base his decision on your credit score. Even to get a job, most employers will not hire you if you have a low credit score. These permeations of the credit scoring system into the fabric of American society have forced all of us to live within a box bound by rules. Rules, just like most, are fallible, and by design fail to consider the statistical extremes. In most situations, that is okay, because statistical extremes can be dealt with individually. Unfortunately, however, the statistical extremes present within the credit reporting and credit scoring industries are more common than they are extreme, causing resentment among those affected.
Lastly, this is where the demand for our service was born. We simply utilize the same mistakes the credit reporting agencies make, but instead of incorrectly reporting negative information, we take specific steps that we know will cause the banks report positive information to our clients’ credit reports to help consumers get loans they need at rates they deserve. The banks, of course, hate losing profit – equitably justified or not - because borrowers figured out how to affect their system in a way that benefits them. Banks tend to respond by disseminating lies and threats, which include legal terms, like “bank fraud” to scare people away from this practice. It is all political posturing, and it is easy for the uninformed person to assume the banksters are telling the truth, especially when that is what they are hoping to find.
The reality is, BoostMyScore.NET has helped to boost the credit scores of normal everyday citizens, as well as bank VP’s and mortgage bankers throughout the country, because they know the truth – that the system is flawed and there is absolutely nothing wrong, much less illegal about improving ones creditworthiness, as long as doing so does not break the law.
To summarize, credit piggybacking is not bank fraud. It is not illegal. It is not immoral or unethical. It is a wonderful service that helps people to save money when they borrow from banks. We are making a difference in peoples’ lives every day and I am extremely proud of what I do.
January 13, 2010
You may think your income is private information. But the credit bureaus may have your number.
And starting in February, your income—as estimated by the bureaus—may be used to help determine whether you get a new credit card.
Tuesday, the Federal Reserve issued its final rules related to last year's Credit Card Act, which, among other things, will require credit-card companies to consider an applicant's income or assets and current debts before approving credit. To provide flexibility, however, the Fed said that issuers can use "a reasonable estimate" of income or assets based on "statistically sound models."
In hopes of such a decision, the three big credit bureaus have been updating or rolling out products that seek to estimate consumers' incomes, based on information in their credit reports, such as the size and age of their mortgages or the size of their credit limits.
Regulations and tighter credit standards mean credit-card companies and banks will need more details on our income and will gather more data on us.
The products also are responding to banks' efforts to tighten credit standards in order to reduce losses and risk. "We look to fill in the blanks where they need the blanks filled in," says John Cullerton, vice president, product management, for Equifax Inc., an Atlanta-based credit bureau.
Credit-card companies can then double-check what we have long reported ourselves against these estimates—which often don't require consumer consent and aren't available to consumers for review.
Indeed, lenders of all kinds are starting to collect ever more financial information from us and about us. Last summer, Fannie Mae began requiring mortgage lenders to verify borrowers' incomes by checking income-tax filings. Instead of simply providing pay stubs and bank and brokerage account statements, home buyers now are being asked to provide copies of their tax returns and are also required to fill out an Internal Revenue Service form known as 4506-T that allows the IRS to release their tax filings to lenders.
Credit scores, which have been long a key factor in whether you get a loan or a credit card, may not be sufficient for many future credit decisions. With the new credit-card law requiring credit-card issuers to consider a customer's ability to pay before opening new accounts, the Fed had proposed requiring people to report their own income or assets when applying for credit.
But retailers feared the proposed rules would squelch their ability to instantly open credit accounts at the cash register because shoppers wouldn't want to disclose such personal information in the middle of a store. Both retailers and the credit bureaus asked the Fed to allow them use alternatives such as the credit bureaus' income estimations instead.
Card companies already are asking for more detailed information in their online applications. Capital One is asking applicants to disclose how much they pay in mortgage or rent payments, how much they have in bank accounts and how much is in their investment accounts. Bank of America and Chase are requiring household income estimates.
In the past, the companies relied on self-reported income information. But lenders already are starting to use Experian PLC's Income Insight product to verify what individuals report, says Brannan Johnston, vice president, income and deposits for the Costa Mesa, Calif., credit bureau.
Experian came up with its estimates by matching credit reports against a deep database of wages and interest and investment income and determining what information about the number of accounts, total credit, payments and other factors best predicted income.
Mr. Johnston says the income estimates also may be used to decide whether to increase a credit limit, since information on credit-card accounts may not be available or up-to-date. In addition, collection agencies have been interested in using the data to determine the most profitable accounts to pursue.
TransUnion LLC, a Chicago-based credit bureau, says most uses of its updated income estimates so far have been used for marketing pre-approved credit cards or other consumer offers, though lenders are also interested in the opportunity to calculate a debt-to-income ratio to see how extended a potential borrower might be.
Experian estimates income to the nearest thousand, while TransUnion offers a range. But both acknowledge the estimates are just that. Experian says that more than 85% of the incomes it estimates at about ,000 will indeed be below ,000—but that's hardly precise. Chet Wiermanski, global chief scientist at TransUnion, said it isn't uncommon for estimates to be off by ,000 or ,000.
Because the bureaus' numbers aren't exact, the companies say their contracts prohibit lenders and credit-card issuers from turning down customers based solely on the information. The estimates may, however, prompt a request for more details from borrowers, like pay stubs or tax returns.
Equifax, through its Work Number business, also provides employment verification and payroll data collected electronically from about 2,000 employers. Lenders, potential lenders, insurers and debt collectors can access the information without getting an individual's specific consent if they're using it for permissible purposes under credit laws.
If all this additional information makes you queasy, here are a few things to keep in mind:
• Since the income estimates are based on information in your credit report, it's more important than ever to make sure the debt data in your report are accurate. Check your three reports at least once a year, or check one bureau's report every four months.
• When you apply for a credit card, a loan or a mortgage, pay attention to what you're consenting to. In the fine print on Bank of America and Capital One credit-card applications, potential customers consent to having both their credit checked and their employment verified.
In addition, if you are asked to fill out a Form 4506-T, be sure to date the form and to fill in the year or years for which the lender can request returns so you know exactly what information will be made available.
Be aware that all kinds of information is being collected about you. Less well-known credit bureaus, like L2C Inc., collect data on utility payments, cable and cellphone bills, payday loans, bank accounts and more, and the data can be used to provide credit scores on those with little or no traditional credit. Ultimately, how you handle all your bills—not just your mortgage and credit card—can make a difference in your options.
Write to Karen Blumenthal at family.money@wsj.com
October 26, 2009
Denver, CO - 10/26/09 - Fair Isaac Corporation – the company who determines your credit score and sells it to banks – recently released a new credit scoring model called FICO® 08. Many American consumers are wondering how the changes will affect them, how soon those changes will take place, and how to raise their new credit scores. A Denver based credit advisory firm, BoostMyScore.NET, has been working diligently to answer the questions not being revealed by the score’s makers.
Firstly, while this new scoring model was released a few months ago, it won’t likely affect any of us for several years. It will take time for it to permeate the entire financial industry in America. Every bank, car dealership, credit card issuer, and mortgage company will be on the hook for a costly “upgrade”, should they choose to use FICO® 08. William Airy, Founder and CEO of BoostMyScore.NET, states, “Simply because Microsoft® just released Windows 7® doesn’t mean that everyone in America is going to buy and install it tomorrow morning.” Airy continues, “In fact, a large majority of banks and lending institutions are still using the FICO Classic® model, which is nearly a decade old.”
However, once FICO® 08 is in effect, credit score declines are predicted nationwide. While leniency will be practiced on small items, like a missed payment, most people will see a reduction in their score as a result of the tighter restrictions against those of us who owe too much money on our credit cards.
So, how do you boost your credit score now and in the future? The answer is simpler than you may think, and it is far easier than being a good credit steward and merely paying your bills on time. While that is certainly the best method to practice, it may not be enough for you to achieve the loan you need.
One of the original intentions behind the new credit score model was an attempt to eliminate an effective and legal credit score boosting strategy called “piggybacking”.
Piggybacking is when one person with good credit rents out an Authorized User spot on their credit card to another person for a small fee. Once the renter is added as an AU, the account history – payments, limit, and balance – for the cardholder’s account appears in the renter’s credit file within a few weeks, thereby immediately affecting the renter’s credit score.
Fair Isaac Corporation permanently approved the piggybacking benefit in the FICO 08 model in July 2008 during a Congressional Subcommittee summit on Credit Education. The confirmation of the piggybacking benefit followed legal concerns presented by BoostMyScore.NET to the Federal Reserve and the Federal Trade Commission earlier that year.
In the end, pay your bills on time, every time. And if you need a quick boost to your credit score, piggybacking looks like a good option.
October 21, 2009
Denver – October 21st, 2009 – In an apparent attempt to frighten the general public away from boosting their credit score through an effective method known as credit “piggybacking”, the Fair Isaac Corporation (commonly known as FICO®) has released confusing and conflicting information to the public over the last two years, to include announcements of a new version of the credit score model dubbed FICO® 08. The new version, initially set to be released back in September of 2007, experienced repeated delays due to inherent conflicts with the Equal Credit Opportunity Act, and was only recently released in August of 2009.
“To a degree, the scare tactics have worked,” says Bill Airy, Founder and CEO of BoostMyScore.NET, “as piggybacking firms around the country have fallen completely off the grid, apparently themselves believing the cryptic and misleading messages released by the credit scoring company.”
In response, the BoostMyScore.NET team has tested the new FICO® 08 model, and according to Airy’s research, “It appears the piggybacking method of boosting personal credit scores under the new FICO 08 model continues to help American Consumers to acquire higher credit limits and better loan terms.” Airy continues, “People are in need of funds to help them purchase homes, cars, and to start new businesses, as well as to keep the ones they are currently running open. Achieving affordable loans helps them to accomplish this, but unfortunately not everyone can fit into the “box” of credit score worthiness. That’s where we come in.”
Now that it is obvious that the FICO® 08 credit scoring model continues to benefit consumers utilizing the piggybacking method, those in need of a credit score boost are urged to contact BoostMyScore.NET. The company, who holds a perfect record with the Better Business Bureau®, specializes in legally adding positive credit history to consumers’ personal credit reports through the piggybacking method the company Founder discovered five years ago.
For more information, go to www.BoostMyScore.NET, or call 1-800-531-1472
July 30, 2008
Controversial technique lets one consumer boost another's credit score
By Jeremy M. Simon
Piggybacking lives. Consumers who have good credit will continue to be able to boost others' credit scores by adding them as authorized users on credit card accounts through a practice known as "piggybacking."
Fair Isaac Corp., creator of the well-known FICO credit score, had announced last year it would end the practice due to abuses, but during Congressional testimony Tuesday, acknowledged it had changed its mind. A company official broke the news during a House Financial Services Subcommittee on Oversight and Investigations hearing entitled "What Borrowers Need to Know about Credit Scoring Models and Credit Scores."
"After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user trade lines present on the credit report" in a revamped version of the credit score formula called FICO 08, Thomas J. Quinn, Fair Isaac's vice president of scoring solutions, said in prepared testimony. "Our scientists have devised a method to consider these trade lines while materially reducing the negative impact that could arise from piggybacking."
January 15, 2009
Article written by Marshall Silver, Harvard Law Graduate, on the legal interpretation of the credit reporting, credit scoring, and credit boosting industries and how they affect Consumers in America.
Read Entire Article (Right Click To Download)
August 8, 2008
Denver, CO -- August 08, 2008 -- Adding people as authorized users on Platinum Tier Credit Card Accounts will forever continue to benefit FICO® scores.
Fair Isaac Corp., creator of the widely used FICO® score, announced last year it would end credit score piggybacking. However, during Congressional testimony in July 2008, Fair Isaac Corp. acknowledged that based on legal arguments made by the experts at BoostMyScore.NET, it had reversed this decision (see "Fair Isaac's Written Statement"). As discovered by BoostMyScore.NET in early 2008, it would have violated the Equal Credit Opportunity Act...
Read Entire Article
August 5, 2008
As the credit score analysts at BoostMyScore.NET predicted, the entire FICO® 08 scoring changeover, which was supposed to extinguish authorized user benefits to the credit scoring system, "was simply a fear based propaganda scare tactic".
According to Bill Airy, President and Founder of BoostMyScore.NET, "this was nothing more than good old fashioned smoke and mirrors politics." The value of the FICO® scoring model was diminishing in the eyes of the banks and lending institutions because of the so called "Credit Piggybacking" strategy used by BoostMyScore.NET and others.
Read Entire Article (Right Click To Download)
August 8, 2009
Denver, CO -- February 8, 2009 -- Adding people as authorized users on Platinum Tier Credit Card Accounts will forever continue to benefit FICO® scores.
More than a year and a half after it was first announced, FICO® 08 -- an updated version of the FICO® credit score system –- is finally making its debut in ‘09.
Fair Isaac Corp., creator of the FICO credit score, announced the first usage of the controversial FICO 08 when TransUnion utilized the new credit scoring program on January 29th. Equifax is expected to adopt the new system later this year. Experian Group, Ltd. has yet to institute the new system and is not expected to do so anytime soon, pending an unsettled lawsuit with Fair Isaac.
Initially proposed in June 2007, the original intent of FICO 08 was to stop the use of credit piggybacking as a method of improving credit scores. Credit piggybacking is a legal method of improving a personal credit rating by adding an individual as an “authorized user” onto an account of a person who already has good credit. This quickly and dramatically raises the authorized user’s FICO credit score.
Fair Isaac took the position that the consideration of “authorized user” accounts in their scoring model was a loophole that needed to be closed.
A Failed Attempt
This matter gained notoriety in January of 2008 when Fair Isaac’s attempt to halt the practice of credit piggybacking was challenged as illegal by BoostMyScore.NET, a Denver, Colorado-based company.
BoostMyScore.NET, which utilizes credit piggybacking to improve clients’ FICO credit scores, was of the opinion that ignoring authorized user accounts in an individual’s credit report was illegal –- and Congress, the Attorney General, and the FTC agreed.
In July of 2008 Fair Isaac, following the counsel of the FTC, conceded before a Congressional subcommittee that BoostMyScore.NET was correct in its finding that it would be illegal to ignore authorized user credit histories in calculating FICO credit scores.
About Credit Piggybacking
“By using the practice of credit piggybacking, those who deserve a good FICO credit score end up with one,” explains Bill Airy, BoostMyScore.NET’s founder and President. “Sometimes it’s the only way to help people out of the Catch-22 that if they don’t have credit they can’t get credit.”
“The way we help consumers improve their FICO credit score is perfectly legal and completely legitimate under the current rules and regulations governing this industry.”
“We’re not getting good scores for deadbeats with bad credit,” Airy clarifies. “Credit piggybacking doesn’t change or erase a bad credit history or make a bad credit risk suddenly look good. It just helps those who need to establish credit and/or raise their credit score to qualify for a loan and optimal financing terms. It’s an important service for legitimate borrowers, especially as the credit markets continue to tighten.”
“We’re not gaming the system in any way,” Airy asserts. “Fair Isaac created the system and we just play by their rules. But oversights and failures in those rules frequently work against responsible, credit-worthy people. Credit piggybacking is the fastest way of correcting and counterbalancing the flaws in their own system.”
FICO 08
Airy’s July 2008 victory required Fair Isaac to significantly revise FICO 08, which accounts for the delay in its release. Fair Isaac Corp. says they have found ways to make it harder for authorized users to benefit from primary account holders’ good credit, but neither the public nor the credit industry is privy to how they will be doing that, or how it will play into their “super secret” FICO credit score formula. Industry insiders believe FICO 08 will limit the number of “authorized user” accounts benefiting a FICO credit score to five; and reduce the benefit of lines that exceed that number.
FICO 08 also includes provisions that will – among other things -- reduce the negative impact of collections under 0 on an individual’s FICO credit score and increase the negative impact of multiple late payments. How any one individual’s credit score will specifically change as result of FICO 08 remains to be seen.
Industry experts predict that it will take more than a year for the lending industry to fully adopt the revised credit scoring model and that it will be quite some time before consumers actually experience the effects of these changes.
"Fair Isaac has decided to include consideration of authorized user tradelines present on the credit report in the… Read More
While this business model WAS considered to reside in a legal “gray” area,… Read More
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