The practice that involves people "renting" credit history to improve their own credit score will come to an end, according to Fair Issac Corp (NYSE: FIC), the company responsible for FICO credit scores. The change will occur in a new version of its credit score system, the sixth generation, this September.

The move ends the ability for a consumer with poor credit to be placed as an authorized user of another person's credit card, who has great credit. This person would then benefit from having the payment history of the primary cardholder on their own credit report and improve their credit scores.

The practice has grown more common with internet companies popping up offering money to people with good credit to take on those with bad credit as an authorized user, then collecting fees from those consumers for the act.

This is fraud people; plain and simple.

It's hard to believe this practice still exists in the world we live in today. In a nation where state attorney offices and the U.S. attorney's office go after anyone and everyone who looks like they participate in fraud, including UBS Financial Services, Dell Inc. (NASDAQ: DELL) and the one that started it all, the Enron case.

This was considered the "first great scam of the new millennium" by Terry Savage of TheStreet.com. She highlighted that people with poor credit could "borrow" good credit for 60 days and then apply for a mortgage at a lower rate. Maybe that's one of the many reasons why this month's
foreclosure rates rose a whopping 90% year-over-year.

What do you think of this new move from Fair Issac? Do you think this is fair to the people with poor credit? What's your opinion?

Piggybacking stops now, says Fair Issac Corp originally appeared on BloggingStocks on Tue, 12 Jun 2007 14:32:00 EST. Please see our terms for use of feeds.