So we all know it's hard to come by a really affordable home loan, especially if you have less-than-exceptional credit. New companies and websites are now offering to "boost your credit" temporarily to allow you to be approved for a great loan. It's important to understand how these companies are actually "boosting" credit, because all though it's not unlawful, it's not necessarily "honest" business either. You will be raising your credit for about 60 - 180 days on average, just enough time to be approved for a home loan you won't otherwise qualify for, while getting involved in a potentially hazardous situation. First of all, these companies are basically raising a credit score by adding an authorized user to a credit card. Sounds a little phony, but these companies have found a way to raise credit scores 50-250 points by adding good credit to bad. For example, one person with bad credit will score points on their credit as a user with great credit is added as a user to their credit card, usually a friend or family member.
You may be thinking.... What's the problem? Well, this loophole sounds enticing, but the appeal comes at a cost - it's just another inventive credit scam. It will only be a short time before lenders have taken further action beyond being aware of the scamming - putting you at risk as the loan-holder who deceptively "bought" an approval-worthy credit score. One state regulator has actually issued a "fraud alert" stating, "consumers, brokers and lenders that complete, submit or participate in the completion and submission of an application for credit that contains misrepresentations or false information are subject to administrative actions and potential criminal penalties by the state." Sure, first time buyers can get the loan rate they want, at the right price, but how long will it last before these companies, and eventually buyers "pay" for these deceptive practices against lenders. Is it really worth the cost?
To read more about this topic, visit: http://seattletimes.nwsource.com/html/realestate/2003654782_harney08.html
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