Anyone have experience "renting out" your good credit?

Question

I wish I understood this concept better. Saw an article in the paper about a way to make money if you have good credit and some credit cards. The company name is ICB credit investors. They hook you up with people who need better credit to buy a house. Somehow you make money at no risk by letting these people with bad credit "rent" your good credit????

Answer 1

Very interesting. You must have seen this article, or one similar to it.
http://news.enquirer.com/apps/pbcs.dll/article?AID=/20070604/BIZ/706040347/1076

I'm afraid I don't have any personal experience with this. Based on the article, it appears that there is little or no risk that the person "borrowing" your credit score will actually steal money from you. I gather that you would have the person added as an authorized user of one of your credit cards, but wouldn't tell him or her the account number. Only ICB would know. To the extent that they are a reputable company (which I can't verify, one way or the other), your account information would be safe.

The article does discuss the ethics of the process, and they are all negative. Doing this may be technically legal, but in effect you are helping people commit mortgage fraud by allowing them to get a better credit rating than what they deserve.

I say walk away from this "opportunity". It may be technically legal and safe, but you're the one who has to look yourself in the mirror every morning.

Amendment: The other answers don't seem to acknowledge the fundamental cleverness of the system. You would share only a single credit card account with the "renter". If the renter defaults on any of his other loans, it doesn't go on your credit report because they aren't your accounts. And the shared credit card isn't a danger, because the renter doesn't know the account number and can't charge anything against it.

There are numerous reasons to avoid dealing with ICB, but it certainly seems that losing money or damaging your credit are not among them.

Answer 2

Well, effectively you, the person with good credit, borrows the money in YOUR name, and then YOU lend it to someone with BAD credit.

Who will usually STICK you with it, and you'll end up having to pay your original loan back, without getting any income from the person you LENT it to.

It's a REALLY bad idea. People with bad credit don't pay back their loans. I don't think you could charge enough interest to cover a 50% or 75% default rate.

It's NOT "no risk". Or rather, it's no risk to ICB, and extremely high risk to you. Even if they put you as the mortgagee, then what - you have an over-financed house, that you have to pay legal and court fees to reposess, and when you finally do, you find out it was overappraised, PLUS all the damage that has to be repaired before it's sellable again, maybe for 75% of the balance that's owed to you.

There ain't no such thing as a free lunch.

Answer 3

RUN away from such offers as fast as you can, and do NOT look back. ANY time you 'lend your credit' or anything similar to someone else, you place your own credit history at risk. If these people default (good chance that they will), you will find the nasties appearing on YOUR credit report.

Does this sound like 'no risk' to you ?

Answer 4

No investment is ever totally risk-free. You're still giving these strangers the benefit of what you've worked so hard to earn. What happens if they can't pay their mortgage, or wreck the house? Ask the tough questions to find the worst-case scenario, and what exactly will happen to your credit if the worst does happen.

Answer 5

Don't do it. If the people "renting" your credit go bankrupt or stop paying their bills, your credit will get dinged...because it's your credit they bought their stuff on.