An Interesting Loophole In The Credit World To Make A Few Bucks – But Is It Worth It?

In stumbling around the internet this week I ran across a Chicago Tribune article that mentioned renting out your credit to people with weaker scores.  I thought to myself, “Is this even possible?  And if so, why the h*** would you want someone else using your credit?”  The answer then dawned on me; money.  Everyone needs money and it is worth their credit score to get it, right?

Therein Lies The Problem

I’ve heard of friends and family adding their kids to their credit card accounts to get them jump-started on the road to credit score health.  It shows that they’ve had an account open for a long time, and payments have been made on schedule.  It goes hand in hand with never closing up your first credit card account as it shows longevity and will boost your credit score.

The sticky part comes when you realize that nowhere in the any of the credit card fine print does it say that you need to be related to the person of the card.  cc.jpgEnter loophole problem #1.

With that door open, why not help someone out that has a bad score if they’ll give you “$x.xx” up front? If you own your house and don’t have a car payment, hey, maybe you don’t care about your credit score, eh?  Should you?

Loophole #2 is that you can add as many people as you want to your card.

Maybe the card company people were thinking that you may have 30 or 40 of your closest kids added to your account, or that you lived in a a tribal community that only kept 1 card between everyone.  Well, the door just opens even more.

The kicker comes in #3 when the subject of money comes into play.

There is no law against putting a dollar value on it.  Some things are intangible, and this probably started out as a guessing game, but apparently has caught on to be more of a science now according to the Chicago Tribune article:

“Some Web sites advertise and price high-quality credit card trade lines on the basis of their credit limits and time on the account. A site called AddaTradeline.com recently offered a card history with a $25,000 credit limit and 2 3/4 years of perfect payments for a fee of $1,025.

Adam Wheeler, who identified himself as the owner of AddaTradeline.com, based in Orange County, Calif., said his business “is legal, although some people might say it’s unethical.” He insisted that his firm does not approve of efforts by clients to mislead lenders. “If they are going to lie to lenders,” he said, “that is not good.”

Each account can rent for as much as $1,500 to $2,000 for 180-day usage. The primary cardholder receives a cut of the rental fee, often hundreds of dollars for each authorized user added.”

I Like Money But Is It Worth It?

Well, short and sweet if you’re reading this blog you know this is a bad idea.  Take it further and think that if your card is also authorized by Joe Schmoe to charge against, he’s got the bill sent to his house, are you sure your address or name isn’t on it anywhere?  Better hope not, because if it is, he has a name, credit card, and could likely look up an address or call in to the customer care center to say he’s “lost his”.

For some reason, as good of a person as Joe may be, his credit score was bad for a reason, and now he’s got your info.  My gut instinct is that Joe isn’t going to be nice to your name.  I’d get out before you get in.

Conclusion

Yea, the upfront glitter and glam of getting a few $1000 for renting out your score seems pretty good, but you may end up paying that back trying to get your identity back in check once someone has gotten ahold of your critical pieces of pie.  Hold it tight and just remember the old saying, if it sounds too good to be true, it probably is…

Filed Under: adviceCreditCredit CardsDebtfinancial education

  • Wow, I had no idea you could do this. I’m willing to bet a majority of Congress doesn’t know either. This will be interesting to watch as it gains in popularity.

    Frank’s last blog post..Wear Things Out

  • I was tempted to do this when I first heard about it… I mean – that’s an incredible passive income opportunity. But, yeah, it isn’t worth the identity theft potential, the hassle, and the hit that my credit could take…

    Brack’s last blog post..NOW! vs. later

  • Unbelievable.

    You’d have to be a damned fool to rent your credit score out. I can’t think of a single way that this could benefit you…the small fee that you collect would quickly be overshadowed by your own hard won and falling credit score. Joe Poor Credit on the other hand would be long gone with the cash, the cars, the motorcycles and what ever else he used your credit for.

    Not me. No way.

    T

    T Edwards’s last blog post..Luck Favors The Prepared

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  • Not worth the risk and the long-term headaches this may bring.

    Alisa’s last blog post..The Audacity of HOPE – August Give Away

  • Way to risky for me.

    Zombie Money’s last blog post..Zombie Free Items Wednesday! FREE Starbucks gift card!

  • @Frank – I have to imagine it will catch on sooner or later; but for now it is open and ripe for the picking it appears.

    @Brack – I’m in the same boat. Might be a tough go if you’re interested in your credit score.

    @T Edwards – Agreed, not a lot of benefit here. The only way I can possibly think it might be beneficial is if you’re completely broke and not planning to use your credit in the future either. Or as a last ditch before bankruptcy; again a huge pitfall, but trying to see both sides…

    @Alisa and @Zombie – Yup, it’s a huge risk that clearly some are willing to jump on though, eh?

  • KG

    This could be one of the most foolish things you could do to your credit standing. There is a reason why people have bad credit and letting them use yours is just dangerous.

    KG’s last blog post..The Personal Effects of a Good Credit Score