Vision Credit Education, Inc.

Delays in the FICO 08 credit score rollouts are giving piggybacking an extended life. Originally slated to begin in September 2007, FICO 08 is expedted to be implemented later this year, allowing the practice of credit renting to temporarily continue.

Piggybacking allows individuals with poor credit history the opportunity to lease authorized user status on a complete stranger’s seasoned trade line. The result is that a mortgage applicant can artificially boost their credit score to obtain a lower interest rate.

FICO 08 will eliminate the practice by omitting authorized user status from credit scoring models. Applicants would no longer receive favorable treatment by engaging in credit renting.

The already strained mortgage industry is reeling from losses due to an unstable housing market. These lenders simply cannot afford to misjudge an applicant’s creditworthiness.

As loan losses from the fractured housing market continue to plague mortgage lenders and the investors that finance such loans, the pressure on credit bureaus to mounting. Once the upgrades are fully implemented, piggybacking will be obsolete. Until then, the brokers that arrange these transactions and the mortgage applicants seeking to gain an advantage will continue to rent authorized user status for as long as the loophole remains.