'Piggybacking' roils credit industry

[Demeter]

Source: Associated Press


'Piggybacking' roils credit industry By J.W. ELPHINSTONE, AP Business Writer

Only a low credit score stood between Alipio Estruch and a mortgage to buy a $449,000 Spanish-style house in Weston, Fla., a few miles west of Fort Lauderdale.

Instead of spending several years repairing his credit rating, which he said was marred by two forgotten cell phone bills and identity theft, the 37-year-old real estate agent paid $1,800 to an Internet-based company to bump up his score almost overnight.

The result was a happy ending for Estruch, but the growing practice is sending shivers through the mortgage industry. Federal regulators are also reviewing the practice. And after being contacted by The Associated Press for this story, Fair Isaac Corp., the developer of the widely used FICO score, said it will change its credit scoring system beginning later this year in a way it contends will end this little-known but potentially high-impact mortgage loan loophole.

Instantcreditbuilders.com, or ICB, helped Estruch boost his score by arranging for him to be added as an authorized user on several credit cards of people with stellar credit who were paid to allow this coattailing. Parents also use this practice when they add their children to their credit cards to help them build solid credit.



Read more: http://news.yahoo.com/s/ap/20070603/ap_on_bi_ge/cash_for_credit_10;_ylt=AhHOunTdMSjB9xzciLhIK_1kM3wV

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THERE'S GOTTA BE A LOOPHOLE. THIS SORT OF THING ALWAYS HAS A LOOPHOLE. NOBODY SHOULD BE KEPT FROM BEING QUEEN IF SHE WANTS TO BE ONE--IT'S UNDEMOCRATIC! --LUCY VAN PELT IN YOU'RE A GOOD MAN, CHARLIE BROWN

[RoyGBiv]

1. Wow ...

We live in a world where "credit" is called an industry.

I'd like to roil the "credit industry" myself.

[liberal N proud]

2. They have sent all the true industry to China

So now they call banking, mortgage, and all sort of other clerical type of jobs industries.

Then they classify food preparation in restaurants such as McDonald as manufacturing.

Twisted world in which we live in these days

[Odin2005]

3. and increases in the price of food isn't considered part of inflation.

I don't trust any economic data * gives out.

[AndyTiedye]

5. Nor Fuel, Nor Housing I Think

If the inflation rate only counts the cost of cheap junk from China, I guess there isn't much.

[Gormy Cuss]

4. It's a natural reaction to a system which relies on one score above all others.

This loophole is about a mile wide. Good credit scores aren't very meaningful in a system where one can buy their way to a good score. Take that, insurance companies, employers, and landlords using credit scores to qualify applicants. Turns out it is GIGO.

By the time as Fair, Isaac figures out a way to correct for this scheme there'll be a new one to replace it.

[depakid]

6. Oh, the poor credit industry

We MUST pass emergency legislation to protect them and put big penalties on those who violate the new law.

Sad thing is, and substantial number of Dems will probably go along with efforts to do just that.

[bemildred]

7. Sounds like "Free enterprise" at work to me. nt