It’s referred to as piggyback tradelines. Each item on your credit report is referred to as a tradeline. And when you piggyback tradelines, you take a good tradeline with a low balance, high available balance, and perfect payment history and it to your report. And how do you do this? Find someone with good credit and have them add you as an authorized user to their credit cards.

What happens is that even though someone else has taken years to build up a perfect tradeline, when they call the credit card company and give them your name and social security number, within a few months all of that perfect history is added to your credit report too. It doesn’t always get piggybacked onto your credit report. But about 7 times out of 10 it does work.

Here are a few examples. A relative of mine was recently married. My relative had better credit than the spouse. Well the two of them wanted to buy a house in the near future and talked to me. After reviewing their credit, I said tradelines X, Y, and Z are perfect and have been open a long time. Call each of those companies and add your spouse as an authorized user. My relative did and a few months later, the spouses score had jumped and two of the three tradelines were now appearing on the spouse’s report. And it only took three phone calls.

One of my customers also recently used this method. I had done a loan for a woman and later did a loan for the woman’s mother. Now the mother had some bad luck a few years ago and had a lot of collections. She had worked very hard to pay everything off but her credit scores were still awful. So we talked to the daughter. We identified her 5 strongest tradelines and had the mother added to each of them. Now not all five showed up on the mother’s credit report. Like I mentioned earlier, not all companies will add the entire trade history to the new user’s report. But the mother got enough of a boost to qualify her for a great loan on a new house.

If this sounds like something that could benefit you or someone you know, here is the best way to proceed. First, make sure you only work with someone you completely trust and who completely trusts you. The FTC and various watchdog groups will correctly warn you to not trust all credit repair companies. Online you can find lots of groups like adatradeline.net or instacredittradelines.com who offer to add you as an authorized user to good tradelines for about $250 or more. But my advice would be to pay nothing and see if you can arrange something with a family member first.

So step one is find a family member with good credit and talk to them. Step two is to talk with them about which tradelines they have had for a minimum of two years with zero late payments and a balance that is 10 percent or less of the credit limit. Once you have identified all of their tradelines that fit all three criteria (two of the three won’t work), then have them call their credit company and add you as an authorized user. They can have the extra card mailed directly to themselves and not you. That way you never know what the account number is and, you never have access to the card and thereby the credit. In fact, in most cases I believe that when they add you as an authorized user, they can request that you not be allowed to even call in and make any changes to the account. This way everyone feels safe about the whole situation. The final step is to wait. The accounts may not show up on the newly authorized users credit report for several months.

After that the person with the original good credit needs to keep the balance on all of the accounts you were added to as low as possible. And all parties involved should monitor their credit regularly. I would suggest once a quarter. And then once all of that is done you get to start working with the three bureaus to fix any derogatory items. It may not be easy, but the good credit will be worth it!

One of the most common errors is incorrect balances. Usually every month your mortgage, car loan, student loan, and credit card companies report your balances to one of the three major credit bureaus. What happens though is that when you pay off a balance or when you close an account the balance showing on your credit report may not be updated to $0. Similarly, when you report a credit card lost or stolen and are issued another card with a new number, often times the old card remains on your report with an unpaid balance remaining.

Now most times, these small errors won’t prevent you from getting a mortgage or a car loan. Most lenders can analyze a report and will notice obvious errors. However, as mortgage companies and other lenders automate their underwriting process to save money and time, these small errors start to make more of a difference.

Another common source of errors occurs between sons and fathers with junior and senior suffixes to their names. Junior’s maxed out credit card can tank dad’s score. And dad’s information can also show up on his son’s report for good or bad.

Another common error on credit reports is that negative information is reported for more than seven years. For example, if you have a tax lien that was paid off seven years ago, it should not still be reported in your derogatory items section of your report. Derogatory items should only be reported for seven years and bankruptcies for ten years.

So the take home message here is that chances are your credit report has errors on it regardless of whether your identity was stolen . The best thing to do is review your report at least annually. You can do this for free by visiting www.annualcreditreport.com. By federal law you are allowed to get one free credit report from each of the three bureaus once every 12 months. The last time I viewed mine I had to enter my information three different times so that I could see what each bureau is reporting on me.

The only problem with this free website is that it does not report your scores. But typically most people know what range of score they are in. If you don’t, you can pay a nominal fee and get your score too from each bureau. Either way, make it a point to check out your report with each bureau right away.

New borrowers often face the problem of a lack of credit history. The usual minimum is two trade lines. These could be credit card, car loan, or student loan. If these are not available, some lenders will look at alternative lines, such as utility payments, or auto insurance payment history. If your credit report shows any derogatory remarks, that item will require a satisfactory explanation. Installment loans with less than 10 months remaining do not generally have to be included in your credit analysis. However, if one of them has a high payment such as $100 or more per month, it will most likely be included in the lenders calculations.

Some borrowers are surprised to find out that a loan, they co-signed for is included in their debt ratios. Unless the borrower can prove that the other party has been making the payments for at least 12 months, they will have to qualify for the loan based on that debt also being included as one of their legitimate debts. If a married spouse purchases a property alone, the credit obligations of the spouse may be used to determine the borrower’s ability to repay the loan.

Bankruptcy requires a minimum of 2 years since the discharge generally speaking, and an explanation will be required for a Chapter 7. A chapter 13 bankruptcy may be considered after 1 year of satisfactory payment history. Usually the court will have to show payment history and approval.
Judgments, along with collection accounts need to be paid in full. The exception would be a collection account with $100 or less owed.
Federal debts such as SBA loans, student loans, HUD or VA mortgages, may not be delinquent. The same applies for tax liens. They must be brought current or paid in full.
Foreclosure within the last 3 years will likewise adversely affect your loan approval. However, there are lenders who will do these loans at much higher interest rates due to the perceived risk involved.

These are just some of the ways your credit can affect your ability to get the home you want. Your mortgage professional can guide you through the process, and help you qualify for the loan you need for the home you want.