Edwin Mansour, the chief executive officer of Tradeline Masters, said he's been in the business for 10 years. Mansour said he's helped customers boost their scores by as much as 300 points by enabling them to become authorized users on other people's credit cards.
Mansour refers to the people whose credit cards are "rented out" as "credit investors." Some, he said, have earned as much as $5,000 a month by allowing multiple authorized users to sign on to their cards. The customers seeking to boost their credit score, meanwhile, pay several hundred dollars for each card they sign on to.
Mansour conceded that his work depends on a "crack in the system," but said that it's up to lenders to review credit reports and check for authorized users.
And while some credit repair agencies have been accused of swindling customers, Mansour said his business operates legally. His company, he said, has helped people who have faced obstacles in the past.
"If a person had bad times a few years ago and all of a sudden, thank God, things turned around for them, why shouldn't they get a second or third chance?" Mansour said. "Why not?"
Others see it differently.
In a public case file on its investigation of one Florida company, the Florida Attorney General's Office referred to the "rent of credit" lines as a way to "facilitate potential lending fraud."
Applying for a loan and presenting a credit score that's been inflated by piggybacking is fraud because it means you are misrepresenting your credit history to a lender, said Marc Savitt, president of the National Association of Mortgage Brokers.
"When a loan underwriter reviews a file and makes a determination on that file whether that borrower is creditworthy to receive that loan, they should be looking at that borrower's own credit not credit that they borrowed from someone else," Savitt said. "Especially in this envionrment, we can't be making loans to people without a true depiction of their actual credit."
Lenders rely on borrowers' credit scores to determine the risk they take on when offering them loans, said Fair Isaac's Watts. If someone misrepresents their credit score and later defaults on a loan, "the lender is out a pocketful of money," he said.
That, he said, "then trickles down to the rest of us with higher interest rates overall."
Lenders and brokers aren't the only ones worried about the impact of piggybacking on their businesses. John Brosnan, a foreclosure counselor in Nevada, is suing a California-based company that offers piggybacking services.
He said that at least two of his customers -- who were trying to obtain new loans or refinance existing mortgages -- stopped working with Brosnan and, instead, used the California company to boost their credit scores and get better interest rates on their loan.
Like other critics, Brosnan said he believes the practice is illegal.
"I lose business because I'm complying with the law," he said.
Watts said that, starting next year, Fair Isaac will implement measures designed to stop people from successfully raising their credit scores through piggybacking. Watts said he couldn't elaborate on how the measures will work because Fair Isaac wants to prevent credit repair agencies from trying to circumvent the new system.