The practice of adding an applicant as authorized user of an existing credit line to improve the applicant's credit score also known as "piggy back credit" may actually get the loan rejected from several major lenders according to originators around the country.

Recently both FICO and Trans Union have addressed the issue of piggy back credit.

According to Trans Union, the company is working with 6 of the top 10 mortgage lending institutions. The company has developed a customized approach that enables lenders to identify consumers who may have added authorized user accounts to artificially inflate their credit report and standing.

"The practice of artificially boosting one's credit score is not just limited to the mortgage industry and the practice is not going to go away for quite some time," said Dina Anderson, senior director, Analytic and Decisioning Services. "The key is to help the industry and our customers determine the difference between a legitimate use of an authorized user trade line and provide a meaningful risk assessment when the practice is being abused."

Recently, the Originator Times has received several unconfirmed reports from originators around the country that loans containing any type of authorized user trade lines are now being rejected by several major mortgage lenders.

The practice of adding authorized users to improve credit scores was highlighted recently when several companies began selling a matching service. The service would allow borrowers with bad or little credit the ability to be added as an authorized user to a seasoned account for up to $1,500 per trade line.

Fair Isaac Corporation has also announced that it will adjust its FICOscoring formula to compensate for authorized user accounts.

"We will do whatever it takes to protect the reliability and accuracy of FICO credit scores for lenders, and to ensure lenders can continue to use FICO scores with confidence when making their most important customer decisions," said Dr. Mark Greene, CEO of Fair Isaac. "We will continue working with lenders, regulators and others in the credit reporting industry to end deceptive practices that fraudulently misrepresent consumer credit histories for profit."