How Is It Legal
Authorized User Tradelines Remain a Legal Means for
Improving Your Credit Fitness
With so many consumers confused about the legality of “authorized user tradelines,” Improve My Credit Fitness wants to set the record straight about how regulators and credit reporting agencies stand in relation to their use. This confusion stems in large part because they were put under the spotlight during the housing market crisis and
A tradeline is basically the specific line-item information about each credit account, with details about the name of
There are three types of customers that can benefit the most from tradelines: 1- Customers who have
Creditors have long followed the practice of furnishing credit information about all authorized users to credit bureaus without distinguishing whether or not authorized users are spouses and/or children. Over the past decade, federal regulators have examined this practice to determine both whether such information should be disclosed, but also if authorized user tradelines should be omitted from FICO scoring completely. In 2007, as the mortgage crisis and subsequent financial crisis of 2007-2010 was heating up, Fair Isaac Corp., the developer of FICO scoring, announced that it was going to eliminate authorized user tradelines from its scoring system. However, after consulting with the Federal Reserve Board and the Federal Trade Commission, Fair Isaac decided to retain them, as their omission might be contrary to law.
For their part, regulators determined that omitting authorized user tradelines from FICO would be in violation of Regulation B of the Equal Credit Opportunity Act. Regulation B prohibits discrimination in any aspect of credit transactions on the basis of age, gender, ethnicity, nationality, or marital status. Regulators also decided that the non-disclosure of authorized user status does not violate Regulation B. Thus, no changes were instituted by the government. At the time, FTC spokesman Frank Dorman said that FTC legal staff had determined that technically the addition of authorized user tradelines “appears to be legal,” a sentiment that continues to hold to this day.
The end result as of today is that adding an authorized user tradeline to your credit report is not in and of itself illegal, but if you were to use such tradelines for the purposes of fraudulently obtaining a loan you have no intention to repay then it would indeed be illegal. Such nuances explain why the FTC spokesperson characterizes it as “appear[ing] to be legal,” and why the use of tradelines is authorized by federal regulators and accepted by credit reporting agencies.
In other words, utilize authorized user tradelines to boost your credit scores and improve your credit fitness, but don’t commit outright fraud with them. The addition of a fake authorized user tradeline, say from a false front company with a fake account; would constitute fraud. As might the use of false credit information in conjunction with securing authorized user tradelines, or the use of tradelines to secure a loan with the intent of never paying it back.
To help ensure the legality of the practice, make sure the actual addition of any authorized user tradelines is conducted by a reputable credit repair company, such as Improve My Credit Fitness. Make sure the company handling this for you is bonded with a $10,000 surety bond and that any payment you make will be protected in a trust account as required by Section 817.7005.
—Disclaimer: Improve My Credit Fitness cannot give legal advice and none of the above information should be construed as legal advice.