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More on Credit Enhancement, from

It has been about three months since I have written about credit enhancement schemes. Today I bring the issues up again because of an excellent story on the topic that appears on In “‘Piggyback’ can lift your credit score,” staff writer Brigitte Yuille digs deep into what I still believe to be a serious problem in this country.

As I have said before, I have no problem with an individual adding someone to his or her credit account as an authorized user. It’s perfectly legal, and in most cases is done for perfectly legitimate reasons. What I’m not okay with, both as a REALTOR® and private citizen, is someone with a poor credit score or non-qualifying income being able to qualify for a home loan based on an artificially inflated credit score. In case after case, the new homeowner defaults on the loan, which only adds to the mounting problems related to foreclosure and Real Estate and Mortgage Fraud.


It’s called piggybacking, and like the childhood playground game, it involves getting a lift. Only with this piggyback ride, it’s your credit score that gets a boost.

Critics claim it’s lenders who are being taken for a ride.

Piggybacking works like this: After paying a fee, you are listed as an authorized user on someone else’s credit card, someone with a healthy credit rating. You don’t actually get to use the card, but the credit history of that card appears on your credit report, making it more attractive.

Internet sites that make these connections claim that this ride on someone else’s credit history can raise your credit score almost instantly. Higher credit scores mean better deals and lower interest rates on loans.

You will, of course, pay for the privilege — often thousands of dollars.

And why would the credit card holder allow you to piggyback on his or her lofty credit rating? Simple, they get paid, usually around $200 per user per month.

Critics say these sites are gaming the system and call it fraud, claiming it violates federal laws and supports identify theft. They say the credit card holders who make their credit available are putting themselves at risk too.

The “piggyback” sites disagree. It’s legal, they say, claiming that not only are they protected by the law but they are also supported by organizations within the credit industry.

Here’s more, as it relates to the Real Estate industry:

Piggyback firms also say that top mortgage brokers have used the technique for years.

Real estate and mortgage fraud expert Ralph Roberts acknowledges that real estate and mortgage brokers have been telling clients with poor credit scores to piggyback their credit. But, he calls the “artificial inflation” of credit scores an invisible enemy.

“You can’t see what has happened until the home is foreclosed. There’s no tool to detect the scheme,” says Roberts.

Roberts says piggybacking is fraud and the companies that offer it are breaking the law.

“Current U.S. Code on bank fraud says whoever knowingly executes, or attempts to execute, a scheme to defraud a financial institution by means of false or fraudulent pretenses can be fined up to $1 million or imprisoned up to 30 years, or both,” says Roberts.

To read the entire article, visit

Posted By: Ralph Roberts @ 12:05 am Comments (4)
Filed under: Credit Enhancement,Mortgage Fraud,Real Estate Fraud


  1. I don’t know how I missed this article. Ralph you’re on my topic again. When we, mortgage professionals, examine credit and we see a history of negative or marginal credit and there in the midst a shining diamond with the words: “Authorized User” we stop, drop and roll. We verify how long they have been on that account and if it is only a matter of months we disallow that trade line. Even if the tradeline is 15 years old but the authorized user has been so for say 3 months or even 8 months that’s automatically not a viable trade line. Furthermore, having credit added to your credit for a non-legitimate purpose, as Ralph so eloquently stated, and then using that credit to obtain a mortgage loan (or any other credit) is fraud by deception. Don’t do it! The company adding you as an authorized user may not face fraud charges … you will.

    Comment by Ken Cook — May 25, 2007 @ 4:17 pm

  2. Thanks for this info. I have been seeing these companies pop up recently. There was no doubt in my mind this was illegal. As a mortgage broker I personally have not seen many authorized users.
    There are credit cards for bad credit clients that build their credit over time. I have posted a list of them on my site.

    Comment by Scott Derkacz — May 29, 2007 @ 10:47 pm

  3. uh……Scott, get your facts straight…its NOT at all illegal.

    Comment by jeff — June 5, 2007 @ 12:07 am

  4. uhh………………. Jeff, get your morals Straight.. your right its not illegal. Utilizing a “loop hole” that creates a different storyline other than the true story line to obtain financing is illegal, or truly mortgage fraud. any time you DEFRAUD the banks it is illegal. uhhh…….. Jeff if they didnt earn the right to that credit and they paid for something to be put on their credit but never used it that is still using a fraudulent loop hole to obtain financing that would never be obtained otherwise. Hey man– so called jeff, whatever makes you sleep better at night. so let me explain it just a little differently next time. Starting this month, thanks to you, the bureaus are going to not allow good true authorized users to use this good credit towards their credit scores. Hey thanks for the facts man, and i am sure you are great with so called fraud loop holes. so lets discuss them over a beer, maybe you can tell me what else you f@(%&) up for all of us. so UHHH…. JEFF what is your last name and who do you work for? and UHh… Jeff what else do you think you know. thanks for defrauding the public if it wasnt for people like you we may have still have a subprime or even an alt-a, or even a jumbo market. SO TFS- MF

    Comment by Sammy Husar — September 8, 2007 @ 12:07 am

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