How Mortgage Lenders Defend Against Tradelines

Authorized User Tradelines For Sale That Can Help Boost Your ScoreAuthorized User Tradelines For Sale That Can Help Boost Your Score

In the world of credit repair, Authorized User Tradelines have been utilized to help temporarily boost borrower’s scores for several years. Lenders have been pushing back against the usage of the tradelines which have presented constant obstacles by adversely impacting lending and mortgage approval strategies. Targeting specific groups of borrowers by offering higher interest in a credit score based, tiered system, institutions previously set hurdles to maximize profit by approving loans based on their perceived risk. With Authorized User Tradelines for sale, that system of profit potential and risk assessment were thrown out of balance.

With Authorized User Tradelines, mortgage rates and their matching credit scores were inflated to favor the borrower in an industry designed to maximize profit with minimal risk. Applicants who previously would have been charged higher interest on loans or not have qualified for approval fell into predesigned banking rating tiers that were established to separate high, moderate and low risk. The greater the amount of perceived risk, the larger the interest rate. As the grew expanding the numbers of Authorized Tradelines for sale, the profit structure suffered due to the large scale compromises in institutional lending integrity.

In simpler terms, banks have a philosophy of risk management which favors the odds on favorite and steers away from any longshots. Any loan which written with a shaky credit score needed more potential profit to compensate for the added risk. Applicants with stellar credit scores were given VIP seats at general admission prices. Authorized User Tradelines were similar to changing the way the system worked. It was like attending a black tie event with invitations sent to those with high credit scores, showing up without an invitation and using the tradelines to name drop and get someone past the doorman. Giant corporate banks are big on limiting free toasters and other bonuses like low-interest rates to customers with the appropriate credentials.

The “Little Line” Lenders Loathe:

Conceptually simple in nature the Authorized User Tradeline selling strategy by credit repair specialists focuses around the willingness of the Merchant credit card industry to extend debt to longtime cardholders. Clients who have maintained low balances compared to high limits on credit cards which have had perfect payment histories for extended periods report the excellence in credit behavior to the bureaus. To the credit reporting agencies, low limits, timely payments and a long file of stellar performance allow a credit score to rise to the top of their rating system. Those who have less than perfect credit can rent the excellent credit from consumers who sell their great credit lines to brokers.

Once the name is added as an “authorized user” the same reporting appears on the credit bureaus of the individual being added to the card and his or her rating will often experience a sudden boost. The process involves no risk to the credit line owner because no additional card or charging privileges are ever extended to the buyer. The length of time the credit is reported for “AU Tradelines” varies from bank to bank according to their individual policies. The impact and jump in credit are dependent on the power of the credit card limit, the age of the reported payment history and the percentage of balance versus limit. As straightforward as the process is and seemingly harmless as it may seem to people outside the financial industry – it is like arsenic added to the daily meal planner of corporate lending executives.

FHA Sends Loud Message with Authorized User Policy Change:

Even the FHA has chimed in with the latest slap on the Authorized Tradeline user’s wrist by requiring minimum payment amounts to be considered as debt in the income qualification ratio. Without copies of canceled checks from the owner of the credit lines spanning 12 months the monthly payment amount for the merchant cards from each will be deemed the responsibility of the applicant. Also, if the tradelines belong to a spouse or another candidate on the same loan, the payment amounts will only be considered once as opposed to twice on the debt side for the approval procedure. Proportionally, if comparing this new adjustment in policy to the current legal system, it would equate to “guilty until proven innocent” as opposed to the present system designed to offer fair trials to those accused of crimes.

Desperate Measures Sought to Recoup Mortgage Profit:

As the massive number of reduced interest loans began to climb as a direct result of the ability to influence the process with the tradelines, policies, and procedures were altered and enforced by most major lenders. It appears to be an ongoing struggle for the banks who remain firm in their defense against savvy credit score fortification. With potential savings of the tens of thousands of dollars in interest per home loan by those consumers who purchased authorized tradelines, often at only a fraction of that amount, big lending appears to be punished by their set of subjective lending standards.

They continue to implement verification methods and interrogation procedures to pinpoint and disqualify any advantage they may gain by finding reasons to charge more interest on loans. Limits on the number of AU Tradelines compared to primary credit accounts during the loan approval process are common among most lenders. There is no one size fits all rule but the larger the number of primary accounts is compared to user lines the better the score and credibility seem.

Changing and Adding Rules to the Game:

In short, the mortgage industry developed an ingenious scheme to charge more interest from applicants who were willing to pay an extra sum for loan approvals in the form of thousands of dollars in additional interest for their dream of home ownership. With low credit scores, many borrowers were happy to qualify and were willing to accept higher payments for longer terms.

When the credit repair industry discovered that they could turn the banking scheme against the bankers and charge a smaller one-time cover charge to the same potential borrower that took a huge bite out of the bank’s cut. When the “golden rule” is threatened, those who determine how the gold is dispersed, who it is distributed to and how many extra ounces they expect in return, will tend to change the rules. As long as the Authorized User Tradelines For Sale market remains there will always be the need for these controversial lines.