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Credit Piggybacks Boost Customer Credit Scores

Individuals with adjustable mortgages whose payments have escalated beyond their means and whose credit scores are too low to refinance are now finding a creative way to keep from losing their homes to foreclosure.

Commonly referred to as credit piggybacking, this method has been used since credit cards were created and has been in practice on a large scale for the past year. According to Ted Stearns, owner of TradeLine Solutions, which offers the service, individuals can use piggybacking to improve their credit scores approximately 200 points within 30 days. The company offering the service maintains a portfolio of trade lines, or credit accounts that have perfect payment histories. The accounts can never have a late payment for 10 years. By adding the individual as an authorized user to one of the good-standing credit accounts, that individual's credit score automatically increases.

"It's no different than a parent adding a child as a user to one of their accounts, the only difference is that we're doing this with several credit accounts for one individual to help them build their credit back up, say from 500 to 700, so they can qualify for a loan with a lower interest rate and save their home," explained Mr. Stearns. "This is perfectly legal and can make a difference in a person getting a loan at a dramatically lower rate." Mr. Stearns admits the method is controversial because credit piggybacking can do in a mere 30 days what it takes credit repair 12 months to do. However, he insists it's perfectly legal. "Someone about to lose their home to foreclosure doesn't have the luxury of time. They're in crisis mode and have to move fast to get their credit scores as high as possible in order to refinance and keep their home."

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