Authorized User Tradelines
What are authorized users (AUs)?
How much money can a Cardholder make?
What are the benefits of being an authorized user (AU)?
There are many benefits to being an authorized user. First and foremost, it will appear on your credit report as if that card is yours. In almost all cases you will inherit the entire credit history of that card on your credit report. For an example, if your mother adds you as an authorized user on her 14 year old credit card, you will have a 14 year old card on your credit report. The entry will look almost identical to hers. The only difference is the "Owner" or "Responsibility" label is "Authorized User" instead of "Individual" or "Joint". You could quickly boost your score hundreds of points being added as an authorized user on a few cards.
What is FICO?
Banks have become completely reliant on the FICO® (Fair Isaac Corp®) scoring model. Essentially, FICO® designed a mathematical equation that can quickly analyze your credit history stored on file with the three Credit Reporting Agencies (Experian, Equifax, and TransUnion) and define it by using a 3 digit score ranging from 300-850®. Banks approve loans and offer better interest rates for applicants with scores closer to 850. According to www.MyFico.com®, 30% of your score is calculated by the ratio of your credit card limits versus their balances (utilization ratio). The bigger the difference is between your combined credit card balances and combined limits, the higher your credit score will be. When our card(s) appear on your credit report, your score is immediately recalculated to show the boosted credit score!
What are the potential risks to Cardholders?
Making money off your credit cards is extremely easy and it almost sounds too good to be true, but of course, as it is with anything of financial benefit, there is a risk. The only known risk to our Cardholders is the slight chance that the credit card company figures out that you, the Cardholder, are making money off of your credit card(s) and the credit card company may do one of two things: 1) close the credit card account, or 2) leave it open, but disallow the Cardholder to add any more authorized users to it. Over the last several years, Rebuilding Credit 101 Services has become increasingly good at learning the trip hazards in the banks’ computer systems, and we are extremely good at avoiding them, which tends to keep our Cardholders’ credit card accounts free from repercussion. As an overall average, the first possibility only happens to about 15% of our credit cards, while the second situation happens to only about 5% of all of the credit cards in our program.
If a Cardholder is worried about the possibility of their credit card being closed by the bank, we suggest that they apply for a new credit card when they sign up for our program. If the card in our program is closed, the Cardholder will still have a credit card to use if they need to, and could potentially begin selling the new card in our program, as well.
The histories of credit card accounts that have been closed continue to be calculated into the credit score, even if the account is closed, prompting little to no effect on the Cardholders’ credit score/report. However, if the Cardholder is carrying revolving debt on other credit cards, and has an account closed, their “overall utilization ratio” will be impacted, which could lead to a lower credit score.
Either way, our current Cardholders unanimously agree that bimonthly cash flow is more valuable than simply having that one credit card. While replacing a credit card is easy, the cash you earn from Rebuilding Credit 101 certainly is not.
Can authorized users (AUs) change/see my account information?
No, they cannot. They cannot call customer service, request any information, change information, or do anything the account owner can. They are pretty much a stranger at that point to the credit card company. They cannot even request a 'new' card - the account owner must do that.
How are they able to match it to my report with only my name/birth date, etc?
In most cases (especially for department store cards) they will not ask for your social security number. They will however be able to match you from your meta personal information. This includes birth date, address, and name. Take for example asking to be placed on your mother's card as an authorized user. You have the same last name, are currently living or have lived at the same address at some point in your life, and your birth date matches. That is enough to make a solid match.
Interestingly enough you'll find that most matches don't even use the full social security number when making any report matches. Hence the sheer number of mis-matches that currently occur.
Who is eligible to become an authorized user (AU)?
Anyone is technically eligible to become an authorized user - however there are some exceptions. It is recommended that only spouses, family members, and friends living at the same address should perform this credit strategy. 10+ years ago, the authorized user credit boost could be done by anyone. Some unscrupulous individuals would sell the rights to be an authorized user, and because of that the credit bureaus at one point considered removing the boost completely.
They didn't follow through with that though, and are now only providing this benefit to individuals with an actual tie to one another. Spouses would have very similar information, as would family members, and close friends who live together would as well. Someone who you've never had any contact with, with no matching personal information would simply just not show up on your credit report and no benefits would be achieved.
"Piggybacking or Authorized User (AU)" tradelines:
"Piggybacking" or AU tradelines is a practice involving seasoned tradelines, sometimes called piggybacking, which uses a creditworthy borrower's accounts to improve the credit rating of an unrelated third party.
The creditworthy borrower adds the third party as an authorized user of his lines of credit, but does not actually provide the third party with materials (credit cards, account numbers, etc.) that would permit the third party to make charges against that account.
The benefit to the third party is an improvement in their personal credit rating—their credit score increases. However, this does not change their entire credit record, but merely increases their credit score as a result of the newly added tradeline. This may make the third party look like a better credit risk, and may improve the third party's access to new credit. However, a credit score is only one aspect of the lending process; that is, the borrower must pass all underwriting procedures, which include much more than the credit scores of the borrower.
Proponents' views: Those who support the concept of piggybacking would suggest, in response:
❋ Risk-based pricing, relying solely on credit scores, does not truly get at the fundamental "risk" of the applicant. So, the access to lower interest rates is not affected entirely by piggybacking.
❋ Credit scores are already artificially modified; that is, it is a made up system. There is no difference between adding an authorized user tradeline and opening a new account; they both affect your credit score.
❋ Federal law, specifically the Equal Credit Opportunity Act, provides for the addition of authorized user tradeline, without regard for the relationship between the parties.
Is this Legal?
According to lawyers familiar with the practice of piggybacking, as well as industry insiders, the act of paying someone to add another person to their existing credit card account is perfectly legal. You don’t have to take our word for it; just take a look at the RESEARCH.
Is this Ethical?
Considering the various ways banks and the credit card, credit scoring, and credit reporting industries have ensnared the American consumer in their web of control, it is hard to believe that using their system, and playing by their rules to place each of us in a more equitable financial position, is anything but ethical. Click the links below, and then decide for yourself.
❋ Denver Business Journal – Lost Fees Will Hurt Banks (pdf)
❋ PBS Video – The Card Game
❋ USA Today – Anger at bank overdraft fees gets hotter, bigger and louder
❋ PBS VIDEO – The Secret History of the Credit Card
❋ A company offering the piggybacking service maintains a network of creditworthy "card holders" or "vendors", those stand by ready to add strangers to their accounts as authorized users for a fee.
❋ A third party, looking to increase their credit score, contacts the company. The company offers a selected tradeline to the client and charges the client a fee per account.
❋ The client pays the fee (anywhere from $500.00 to $1,000.00 per tradeline).
❋ The company submits the order to the card holder.
❋ Once the tradeline reports, the company pay the card holder their fee (anywhere from $50.00 to $250.00 per authorized user) and the company keeps the remaining funds as revenue.
Rebuilding Credit 101 AU Program
The Rebuilding Credit 101 AU Program is the same as every other model above except that our goal is to get the client funded and we pay cardholders a percentage of the funding for each client:
❋ You can use 4 or 8 of your accounts to let clients become AUs on your accounts.
❋ You add the client to be funded as an AU on three of your cards.
❋ You then add the client on as joint on the 4th card.
❋ We wait for the accounts to post to their credit reports.
❋ Once all the lines post to the credit report, we take them to funding and you earn 1% of the entire funding. Takes up to 15 days after posting for funding and payout.
❋ For (4 AUs only) then the payout is .5% of the funding, when we have to find the Primary.
❋ You can do up to 4 of these with 8 registered accounts in a month.
How do we qualify someone to become a Cardholder?
1.A Cardholder must have at least one credit card with a perfect payment history (no late payments).
2.The credit card(s) must be at least 6 months old.
3.The Cardholder must always maintain a balance of less than 10% on their credit card(s).
4.A cardholder must be able to add someone to their card within 48 hours of email notification that they have a new client.
What types of credit cards is Rebuilding Credit 101 looking for?
❋ AMEX all cards
❋ Citi Bank
❋ Barclays/Juniper Bank (US Airways/Frontier Airlines)
❋ Federal Credit Unions
❋ Capital One
❋ Bank of America
What is the required role for Cardholders?
A.Every credit card account in our program must be used regularly, but must always maintain a balance of less than 10% of the available credit card limit. Just use them to buy a tank of gas every couple months and pay the balance in full as soon as the bill comes in the mail. Something needs to be owed on the account at least once per month.
B.If a balance is over 10%, it must be paid down before the credit card’s reporting date, which is listed on your credit report with TrueCredit.com, and is not necessarily the due date of your payment. You can also transfer the balance to a new credit card.
C.Allow a small balance to report each month to ensure that your credit card company reports the activity as expected. If the credit card history for your account is not reported for an Authorized User that has been added to your account, then you do not get paid for that addition until and if it does.
D.All clients that will be used have signed and returned applications / contract, and we have validated their information to be accurate and true, our system will automatically send an email to the Cardholder with instructions on how to the client’s personal data (SSN, DOB, and name) on an email. We will send two clients for test runs for the first time. The Cardholder will then call their credit card Issuing Banks or go online, and add the client(s) as authorized user(s) to their credit card(s) no more than 48 hours later than receipt, but before each individual credit card’s reporting date and if participating in the Primary Tradeline Program call their credit card and add the user on as a Joint Applicant. Do NOT print the client’s sensitive information or copy it anywhere outside of the email, as doing so can create an unnecessary security risk.
E.Immediately following the addition of the AU to the credit card account, please reply to our email to let us know that the addition is complete.
F.Within 7-10 business days, the Issuing Bank will mail a physical credit card directly to the credit card’s billing address with the name of the client (Authorized User) and the account number on the front of the card. The Cardholder must fax or email a copy of the credit card with the authorized user name displayed, making certain to remove the 16 digit account number and 4 digit expiration date prior to sending. Verification with each client that the history for your credit cards have reported to their credit report and funding is applied for and received is required before payments are made to the Cardholder.
G.The Operations Manager will inform the Cardholder when they can remove an authorized user from the credit card, and will then send over new clients to be added, and the whole process starts all over again.
Also find questions and answers with more info on Tradelines/AUs: