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206578_credit_card__gold_and_platinum.jpgNew of overnight credit boosting services has caught the nation by storm. A loop hole in the credit scoring system that has been discovered by credit repair agencies has made it so that literally overnight a person can improve their credit score by hundreds of points. While America was watching the home loan bust happen across the United States and as home loan lenders tightened their rules on lending to those with poor credit, credit repair services discovered how they can raise people’s credit scores….overnight…

How does credit boosting work? Credit repair agencies are literally renting out peoples high credit scores. The credit repair agency will take their bad credit client and add them onto their good credit client’s credit card account. While the client that has bad credit will not have access to the credit card, they will show up as an authorized user and then be scored by the history of the credit card payments and what not from the persons account that they are on with the good credit score.

The credit repair agency will keep the client with bad credit on the good credit account for 90 days, which gives them time to get financing for whatever they needed the credit rise for at a rate that can be significantly lower than should they have applied before they used the agency.

Lenders have not been too thrilled with this form of credit repair because they use FICO credit scores to determine a person’s credit worthiness. With people raising their credit score in this manner, lenders are fearful that the high number on defaults on loans will continue to rise. When the lending industry is hit with a lot of defaults, the whole lending industry takes a hit because they have to make up what they lost in one way or another.

Fair Isaac has stepped in and stated recently that come September, the new FICO credit scoring model will not allow authorized users. While September has come and gone there may still be some precautions that will be put into place that will curb those that use these services from getting approved for loans.