What Does Buying Trade Lines Mean When Referring to Credit Scores?

People needing good credit instantly might hope that they could just buy a credit history--and they can. The credit scoring model used by most lenders has a loophole that lets consumers piggyback on the credit of another party. In 2011, this option is back after several years of being ignored by the bureaus, but only for people legitimately connected to an account.

Identification

Buying trade lines refers to the practice of paying a company or private individual to add a consumer to a credit account in good standing. When a consumer becomes an authorized user on a credit card, he adds all of the history to his credit history immediately. While authorized accounts are intended for close friends and family members of an account holder, anyone can become an authorized user. Thus credit repair firms sometimes use this tactic to help their clients. This is not illegal, even if the credit bureaus disagree with the practice. Authorized user accounts are preferred to cosigning, because authorized users are not responsible for the bill, whereas all cosigners are legally liable for a debt.

History

The credit bureaus ignored authorized user accounts for credit scoring during the mid 2000s. The bureaus and the Fair Isaac Corporation--developer of the most popular scoring model--brought authorized user accounts back into the fold in 2008 with the release of FICO 08. Authorized user accounts were reinserted because ignoring them denied credit history to the millions of legitimate authorized users.

Disadvantages

Although buying trade lines is possible in 2011, it is also very risky. The credit bureaus and FICO added authorized user accounts in FICO 08 because they found a way to root out accounts purchased for the purpose of building a credit score. This means that unless you are related to the primary account holder, the bureaus will probably identify it as a fraudulent account, according to Consumer Reports.

Considerations

There is no guarantee that buying a good trade line will boost your score enough to qualify for a loan. Most lenders want to see several accounts in good standing. You could look to family and friends who might add you as an authorized user without having to pay any fees and to help avoid the account looking like a way to circumvent credit scoring standards. If your spouse has an excellent credit history, for instance, it makes sense to become an authorized user, because the banks will look at both spouses' credit histories.