Business5 Legal Implications of Purchasing Tradeline You Should Be Aware Of

5 Legal Implications of Purchasing Tradeline You Should Be Aware Of

Tradelines are a method that has become popular for people and organizations who want to enrich their credit profiles. In essence, tradeline is any account appearing on a credit report such as mortgages, credit cards or loans.

People may be able to increase their credit scores quickly by buying authorized user spots on well-established tradelines (accounts with a long track record of good credit performance). 

However, there are several legal issues that must be considered by buyers before making the purchase. Below are some legal implications associated with buying tradelines:

Fraudulent Representation

The risk of fraudulent representation is one of the most significant legal dangers involved in purchasing tradelines. 

It could be misleading if you buy a trade line to inflate your FICO score artificially. Misrepresenting your solvency can have grave consequences like denial of loans and fraud cases in court.

Bank and Lender Policies

There is no bank or lender that allows their clients to use bought tradelines. According to these institutions, this amounts to credit score manipulation. 

By the time it is discovered the client may be disqualified from further credit products, and their accounts can also be closed immediately while severing existing relationships with the financial institution.

Credit Card Issuer Agreements

The terms of service for many credit card issuers state that authorized users cannot be added just for selling tradelines. The sellers as well as those buying in search of the desired improvement of credit can face closure by the issuer.

FCRA Compliance

Fair credit reporting act (FCRA) directs the way credit information is reported and used. Within the FCRA, purchase of tradelines may be a legal grey area, especially where an added authorized user does not have a legitimate relationship with the primary account holder. 

Failure to follow FCRA rules may result in fines and other legal consequences.

Potential Scams

The trade line market has many scams that can prey on unsuspecting victims. Some unethical sellers may steal your money without ever delivering the promised credit improvement, while others might put you on accounts with poor standing. 

Being defrauded leads to not only monetary losses but also worsens your credit rating further than it was before.

Tips on How to Navigate the Tradeline Market Legally and Responsibly

For those willing to adventure into the trade line market, here are some guidelines that can help them maneuver through it legally and responsibly:

  • Do Your Research: When you go to buy tradelines, investigate potential providers thoroughly. Look for reviews, testimonials, and any red flags that may indicate fraudulent activity.
  • Understand the Terms: Make sure you fully understand the terms and conditions of the tradeline purchase, including any agreements with the credit card issuer.
  • Consult a Professional: Consider consulting with a credit counselor or legal professional to ensure that your actions comply with all relevant laws and regulations.
  • Maintain Transparency: Be honest with lenders about your credit history and any steps you’ve taken to improve it. Transparency can help prevent accusations of fraud.
  • Monitor Your Credit Report: Regularly check your credit report for accuracy and report any discrepancies immediately.
  • Consider Alternatives: Explore other legitimate methods for improving your credit score, such as paying down debt, disputing inaccuracies, and building a solid credit history over time.

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