Credit Restoration Scheme Promises Quick Score Increases But May Be Illegal

Establishing a good  credit score is not all that difficult; all you have to do is pay your bills promptly. But if you have a bad FICO score from a history of not paying your bills promptly, fixing your score and building it up to a level where you can get competing loan rates can take some time. It can take a few years of paying your bills punctually to improve your score and it can take seven years to eliminate a judgment or a bankruptcy from your credit report. Most people, understandably, would rather not wait that long and there is not a shortage of institutions that offer to repair credit quickly.

Several institutions are offering remarkable increases in credit scores of up to 200 points in as little as 60 days using something known as “seasoned credit.” The concept is basic – if you’re added to the credit account of someone with good credit as a cosigner, that good credit will affect your own FICO score. What these companies do, for fees as high as $5000, is arrange to include your name as a cosigner to the accounts of willing participants who have great credit of their own.

Adding a cosigner to an account is not against the law; husbands and wives include each other to their own accounts every day. What is illegal about this system is that it is a deliberate effort to change credit history and credit scores. If it is done for purposes of getting qualification for a loan for which the consumer otherwise would not qualify, such as for a mortgage, it comprises fraud.

Besides the questionable legality of the practice, there are several other reasons why this kind of credit “repair” should not be attempted. The idea of having someone else’s credit rub off on you works both ways. Customers of these institutions have no idea whose accounts their names are being attached to, and if those customers stop paying their bills, then their credit score will go down along with yours. None of this is under your control; you’re stuck with whomever they stick you with. Since these companies publicize that when your score increases, you can become part of their “good credit network”, it only stands to reason that you may have your name attached to that of a person who only recently had a bad credit history, too.

Increasing your credit score by 200 or more points in 60 days’ time sounds like a good idea. But the risks of repaying someone thousands of dollars to do it for you are great. It is better to build your credit the old fashioned way. Take your time.