Authorized User Marketplaces

Throughout our time at SentiLink, the team and I have come across a ton of interesting fraud — some synthetic, some a broader form of credit abuse, but all of it involves a significant degree of cleverness on the part of the borrower. Going forward, we will be sharing the different types of tactics and MOs that we've found particularly interesting. Each of these techniques exposes some gap in the current underwriting process.

Over the past year, we've come across applicants whose credit scores are artificially high. One of the most common ways of boosting credit scores is through purchasing authorized user tradelines. Credit repair services such as www.tradelinesupply.com and www.boostmyscore.com thrive by providing a marketplace for people to buy and sell authorized user tradelines. While there is nothing illegal about the purchase of authorized user tradelines, it is frowned upon by banks, and banks are starting to update their terms of service to disallow such behavior.

Taking a step back, the reason this works is because historically applicants with larger and older authorized user tradelines tended to perform better than those without such tradelines. Consequently, credit scores have treated such tradelines favorably. Additionally, authorized user tradeline holders typically had a relationship with the primary account holder. However, credit scores cannot distinguish between someone who has legitimately obtained an authorized user tradeline from someone who has purchased one. One idiosyncrasy about authorized user tradelines is that the open date posted on the credit report is actually the primary account holder's, rather than the date of when the authorized user tradeline was added. Assuming an older tradeline is being added, applicants will see their average age of credit increase. Since this is a major input in most credit models, applicants can get serious boosts in creditworthiness from the purchase of authorized user tradelines.

Lenders have access to the credit reports of their own applicants. As a result, one quick check to see whether there are shared authorized user tradelines (from the same supply company) is to search for authorized user or terminated authorized user tradelines that share the following 4 characteristics:

• Open Date
• Subscriber Display Name
• High Balance
• Credit Limit

Once you identify shared authorized user tradelines, assess whether or not you think there is a legitimate relationship between the tradeline sharers.

From our work, we've seen the following:

• 21% of credit reports include at least one authorized user tradeline (though the vast majority of these are legitimate)
• About 600,000 authorized user tradelines have been purchased so far
• Mean number of purchased authorized user tradelines is 2.0 (for purchasers)
• There are at least 112 significant authorized user marketplaces or brokers

Authorized user tradelines are a common way to boost credit scores. Understanding which applicants have an artificially inflated credit score due to purchasing authorized user tradelines will help accurately assess the creditworthiness of applicants.

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Max Blumenfeld is Co-founder and COO of SentiLink. Prior to SentiLink, Max led Risk Operations and Fraud Data Science at Affirm. Max holds a degree in mathematics and economics from the University of Chicago and was named to Forbes’ 30 Under 30 list in 2020.